‘I want a bit of added lux­ury in re­tire­ment’

The Daily Telegraph - Your Money - - MONEY -

A for­mer de­tec­tive con­sta­ble hopes to make the most of her po­lice pen­sion and sav­ings. Harry Bren­nan re­ports

Ear­lier this month the state pen­sion age for women was brought into line with that of men at 65. The equalised state pen­sion age will now rise to 66 by 2020, mean­ing some women will have to wait years longer than planned be­fore they can start to draw their state re­tire­ment in­come.

Many have been caught out by the change and, as women tend to live longer than men, will have to do every­thing they can to make their money go fur­ther.

Amanda Neimer, 62, is ap­proach­ing state pen­sion age and wants to in­vest her spare cash to pro­vide com­fort in her later years.

Now liv­ing in Petham in Kent and work­ing for the lo­cal coun­cil, Ms Neimer pre­vi­ously worked for Kent Po­lice as a de­tec­tive con­sta­ble.

Dur­ing her po­lice ca­reer she worked in child pro­tec­tion, the Crim­i­nal In­ves­ti­ga­tion De­part­ment and in im­mi­gra­tion and cus­toms with Spe­cial Branch on the French side of the Chan­nel Tun­nel.

She has just sold her house and is happy to re­main rent­ing for around five years un­til she turns 67, when she will con­sider buy­ing a smaller prop­erty and may stop work­ing.

After sell­ing her home in or­der to move closer to fam­ily, she had £132,000 in spare cash. She put £50,000 in Na­tional Sav­ings & In­vest­ments Pre­mium Bonds, with an ef­fec­tive in­ter­est rate of 1.4pc, and has an­other £20,000 in easy­ac­cess cash ac­counts.

Ms Neimer has a re­main­ing £40,000 that she “doesn’t know what to do with” and is con­sid­er­ing in­vest­ing in the stock mar­ket through funds. She said she had a medium-to-low risk ap­petite and lit­tle in­vest­ment knowl­edge.

She takes home around £1,400 in pay, plus in­come from a po­lice pen­sion that pays around £830 a month. Her rent is £875 a month.

“I have been work­ing all my life and in my later years I want to have a bit of money to pro­vide for some lux­ury,” she said. “I want to be able to en­joy my re­tire­ment and be com­fort­able. I’ll be trav­el­ling to Aus­tralia to visit friends and have had enough of fly­ing econ­omy class.

“Some of my friends have sug­gested in­vest­ing in gold, oth­ers in high-risk in­vest­ments. The re­turns promised seem at­trac­tive but, for me, to lose any money would be cat­a­strophic.”

Hay­ley North of Rose & North, a fi­nan­cial plan­ning firm, said:

The key for Ms Neimer is se­cur­ing a new home and re­duc­ing her ex­penses, mak­ing sure she has cash avail­able when she needs it and mak­ing the most of the ex­tra in­come while she has the en­ergy and en­thu­si­asm to travel.

Given her cau­tious ap­proach and fear of high-risk in­vest­ments, she needs a guar­an­teed in­come in re­tire­ment to en­sure she does not need to in­vest in the stock mar­ket.

She is in a for­tu­nate po­si­tion with her po­lice pen­sion. This is a fi­nal salary pen­sion and the value of the in­come it pays should in­crease with in­fla­tion – cur­rently 2.4pc – each year. As Ms Neimer is ex­pect­ing a full state pen­sion, cur­rently £730.60 a month, her gross in­come will be at least £1,561 a month. This means that when she stops work­ing she will have enough re­tire­ment in­come to cover her costs, as­sum­ing she uses her sav­ings to buy a new flat as planned.

Based on where she lives now, she should be able to buy a one-bed­room flat for around £100,000, leav­ing her with some cash for emer­gen­cies and longer-term sav­ings.

Al­though hold­ing Pre­mium Bonds will yield lit­tle in terms of re­turn, the money is fully pro­tected thanks to gov­ern­ment guar­an­tees on NS&I ac­counts. The cash sav­ings she holds are fully pro­tected up to £85,000 by the Fi­nan­cial Ser­vices Com­pen­sa­tion Scheme (FSCS).

I rec­om­mend that she save the £40,000 in cash. This will en­sure that her funds are read­ily avail­able for the pur­chase of the new prop­erty when the time comes.

She should be care­ful not to lock too much of her cash away in longert­erm fixed-in­ter­est ac­counts as she Would you like a Money Makeover? If you’d like to as pos­si­ble be con­sid­ered, please), de­tails email [email protected] of any debts tele­graph.co.uk (in­clud­ing with the sub­ject mort­gages) line “Give and how me a Money you would Makeover”. de­scribe your Please pro­vide at­ti­tude the fol­low­ing to in­vest­ment in­for­ma­tion: risk;

Your name, age and tele­phone num­ber (we will not share this with any­one);

Your main fi­nan­cial goals (as much de­tail

Your cur­rent in­vest­ments, in­clud­ing cash and prop­erty.

You must be will­ing to be pho­tographed for the ar­ti­cle. might have to pay a penalty to with­draw such money early.

Once she has started to draw her state pen­sion she will have sur­plus in­come of at least £730 a month, which she can use to save fur­ther or put to­wards a busi­ness- class flight to Aus­tralia. These typ­i­cally cost any­thing from £3,000 for a round trip and prices vary de­pend­ing on when you travel.

She should be able to af­ford this once she has al­lowed for the pur­chase of a new home.

Nick Bam­ford of In­formed Choice, the fi­nan­cial plan­ning firm, said:

Ms Neimer’s at­ti­tude to in­vest­ment risk is medium-to-low. This con­cerns me be­cause even a medium-risk port­fo­lio can go through a sig­nif­i­cant fall in value.

Based on her at­ti­tude to in­vest­ment risk, I would rec­om­mend that she does not buy stock mar­ket in­vest­ments, as such in­vest­ments can go up and down in value and she needs her sav­ings to re­main sta­ble over time.

For her, it is prob­a­bly worth ac­cept­ing the mod­est growth she can achieve by keep­ing cash in an in­ter­est- earn­ing ac­count in re­turn for avoid­ing the dis­ap­point­ment of in­vest­ing money and see­ing it fall sig­nif­i­cantly in value, which could leave her un­able to buy the prop­erty she wants.

Ms Neimer should be able to rely on both her po­lice and state pen­sions, along with what she earns now, to pro­vide for a se­cure re­tire­ment, and can fall back on her cash re­serves in emer­gen­cies. With this in mind I don’t see a press­ing need for her to ex­pose her­self to the mar­kets and take on in­vest­ment risk. If she in­tends to buy a small flat at some point in the fu­ture, per­haps in around five years when she starts to re­ceive her state pen­sion, I would again ques­tion the need to in­vest at all.

Gold is a pop­u­lar in­vest­ment, es­pe­cially dur­ing the pe­ri­ods of un­cer­tainty and volatil­ity such as those we are go­ing through now. But re­mem­ber, as with any type of in­vest­ment, the price of gold can fall as well as rise and you may not get back what you put in.

I wouldn’t pay too much at­ten­tion to your friends’ rec­om­men­da­tions.

‘My friends have told me to buy risky as­sets and gold, but I don’t want to lose money’

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