How best to invest my cash windfall?
Q I AM retired and I’ve recently inherited a chunk of cash. I’m wondering where I might invest it – but I don’t want to take on a big risk. A
BEFORE looking to invest it’s important to ensure you have sufficient cash to give you an emergency fund. A basic rule of thumb would be to keep back three months’ worth of expenditure if you are in retirement (or six months if you’re still working) plus enough for any planned additional expenditure over the next couple of years.
If you have excess cash over and above these levels, and you don’t envisage needing it for five to seven years, then investing that money could be an option. Especially as the rates from cash savings accounts are at rock bottom at the moment.
The world of investing can be complex though, and you need to ensure you have a working knowledge of markets and the type of asset you’re investing in before proceeding. The financial pages in newspapers can be a good place to start, then take it from there.
Q I’M almost 60 and I’ve been trying to get the 25% tax-free cash out of a workplace pension. I’ve been told I will lose a lot of cash in tax doing this and my pension would be small because I had accessed it early. I thought you were allowed to take 25% without penalty?
A NOT all workplace pensions are the same and depending on the specifics of the scheme you are a member of, it could be that you have a different entitlement to tax-free cash, or that penalties will apply if the pension is accessed before the scheme’s normal retirement date. The pension scheme administrators will be able to advise you further as to the specific details of your particular pension.
I would also mention that in some instances you will be required to seek professional advice if you wish to access your pension.
Q I WILL turn 66 in August and can get my state pension. My wife died suddenly in 2019 at age 61, before she could claim her pension. Will I be entitled to her state pension? If so, would it be automatic or do I need to claim?
A STATE Pension rules changed on April 6, 2016, and any individuals reaching State Pension age since that date qualify for the new State Pension. Now, when both partners reach State Pension age, a surviving spouse or civil partner may be able to inherit some benefits that might exist when one of them dies. But the new rules are based on your individual national insurance record and there is no inheritance by a surviving spouse of the basic State Pension benefits.
Gov.uk provides official information about the State Pension. Access it and search for ‘The new State Pension: Inheriting or increasing State Pension from a spouse or civil partner’.