What to do with a retirement gratuity.

I'm retiring from my job soon and lucky to be getting a €60,000 gratuity. However, I'm not sure what to do with the money. It's probably not considered to be a particularly large sum in today's world but it's substantial enough to want to manage it properly.

I'm 65 years old, single, no children and have inherited a house, without mortgage. I have no outstanding loans or bills and have paid off my car loan. I have a relatively small emergency fund of €8,000. But no other savings. I'm lucky to have a work pension of about €10,000 annually, plus the old age pension.

Some of the money (perhaps €2,000–3,000) will be spent on a once-in-a-lifetime holiday.

I'll spend probably another €5,000 on updating technology at home.

That should leave roughly €50,000.

The house needs a bit of modernisation. It would be very easy to spend the entire amount on that but it might not be entirely wise. There's obviously no point in putting the money in a deposit account or leaving it sitting in a current account.

I did attend a pre-retirement workshop, which was good, but all the talk of AVCs and investment just went over my head, as usual!

My big fear is that if most of the money is spent now, I'll have very little for the future. But what to do with it...

Thank you in advance for any advice.

Personally, I think you spend the bulk of the money making your home as comfortable and energy efficient as possible.

I’m assuming you intend to stay put in your current home for the foreseeable future.

Thanks Sarenco. That would be my thought too but I seem to imagine some large unexpected expense in the future, for which I’d need cash. I will indeed be spending the rest of my life there.

Maybe I should worry about the present instead!

Well, it’s a bit of a balancing act.

Maybe hold back €15k to bolster your emergency fund and spend the balance on home improvements.

Also, bear in mind that there are grants available for various energy upgrades -

Some upgrades will save you money going forward, Solar Panels and batteries, depending on roof space, orientation etc... Pumped wall and attic insulation and heating controls.

Congrats on getting to the finish line!

It might be worth factoring this grant into your equation if the house needs an upgrade.
https://www.gov.ie/en/service/1ca60...hat-the-housing-aid-for-older-people-grant-is

DingDing said:

Some upgrades will save you money going forward, Solar Panels and batteries, depending on roof space, orientation etc.

Click to expand...

Commented on this in another thread recently, a ~10k investment in solar battery would earn/save you about €1,500 a year in either avoided import costs, ability to optimise via tariffs, and/or feed-in tariff payments for exported electricity. You can/should obviously dial this up/down to optimise for your own personal usage level and pattern and exploitation of €400 allowance for export.

But to compare that to a 2% escalating annuity, you’d get about €400-450 a year for that €10k.

Now it’s not quite the same as a lifetime annuity but since it should last 25-30 years, it’s pretty close!

I think if you keep it in cash, some kind of deposit, you can add it to your 10k emergency fund.
You will be loosening the purse strings now you are retired
Try to retain some savings for 10 or 15 years
By then you'll be 80 and you won't need that much hopefully

pingin said:

My big fear is that if most of the money is spent now, I'll have very little for the future. But what to do with it...

Click to expand...

This is the line that stands out for me and needs further thinking on
My first thought is, is the pension and the state pension enough for you to live the lifestyle that you want
If so great, then spend some of it now on the things you want and bank the rest for future spending
If not, then you need to look at how that lump sum can be used to bridge the gap between income and expenditure

But I do think no matter which situation you're in, take that trip of a lifetime, after all, you've earned it!!

A lot of talk here about energy upgrades etc and they are definately something to consider but is there also things (and apologies if this is a bit of a downer) to future proof the house for when you get older? A downstairs bathroom/loo is one obvious thing for example if you don't have one already.

@Peanuts20 Looking at that at the moment. Our house is fine but making the garden more manageable, hard landscaping, with a few raised beds etc.... We get a lot of pleasure from the garden, but if it wasn't minded in its current state it would be a jungle in a couple of years.

Its a great point and I forgot to mention it. The home upgrades are great as well, while you have the time and capable of influencing the modifications.

I had a friend who had a mild stroke a couple of weeks ago. They will make a full recovery but if it was just a bit worse they would have had ongoing mobility issues that would require modifications to the bungalow. Even has a load of unnecessary steps to the door. When we design and select houses in our youth, they sometimes aren't optimal when we are older.

Newer built houses are more accessible and have designed in some of the features.

Thanks DingDing. The house has stone walls, with a little bit of damp. However, the roof is south-facing and get plenty of sunlight all day long. Does it not take a long time to recover the cost of solar panels though?

Thanks ScoobyDoo.I'll certainly have a look at that.

conor_mc That sounds like a pretty good return for selling electricity. I'll certainly have a look at it. What sort of set-up costs are involved?

moneymakeover Thank you. I hopefully won't be loosening the purse strings! I'm moving to the country, where I hope there will be fewer opportunities for spending. The thing about putting money on deposit is that there doesn't seem to be much interest available anywhere. In the past, whenever I've put money away, I've tended to gradually eat into it until there was very little left. I'll have to try to avoid that.

Cervelo, I think my two pensions will just about allow me to break even every month. I'll need to really curb my spending. While I favour putting money away, there doesn't seem to be anywhere where it can earn a decent return.

I think I'll definitely take the big holiday as I'll probably never be able to do so again.

Peanuts20, futureproofing the house is definitely on the agenda. Both parents ended up in wheelchairs and it was a nightmare for them to get about the house. Going outside was a major undertaking. Also, the garden has narrow paths (only 2 feet wide) and is completely off limits for a chair. I feel a bit guilty about doing it because my father (no longer with us) put in mahogany doors at great expense 20 years ago. Then again, I suppose you can't be sentimental about these things.

DingDing. A very good point about the garden. The garden has become completely overgrown and needs a total clearout, something I intend to tackle when I get back there. Also, it's completely inaccessible, with the paths being only 2–3 feet wide. I'm looking forward to doing it and the pleasure I'll hopefully get from it in years to come.

Thank you all again. For some reason there's no reply box under your posts, so I can't reply directly under what you wrote. Being an infrequent poster, maybe I'm missing something.

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