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    • Not Me Officer
    • By Not Me Officer 12th Jul 17, 9:36 PM
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    Not Me Officer
    Having a child and saving for retirement. Advice from parents & non parents alike?
    • #1
    • 12th Jul 17, 9:36 PM
    Having a child and saving for retirement. Advice from parents & non parents alike? 12th Jul 17 at 9:36 PM
    As you can probably tell, I've been having the discussion with my wife about the idea of a child. I'll stress early in this post that if we have one it'll be only one (unless it's twins or something from the start). I know 'they all say that' but let's go with there being one for the purpose of this.

    I also know there's no bigger hit on retirement planning but i'm not talking of putting aside the absolute maximum in life, doing without for 30-40 years just so i can have a rich retirement.

    Hopefully my aim is clear but it's about finding the balance.

    We are seriously considering having a child. I am here in this thread to discuss with people i don't know because people we do know i think are giving terrible advice. Especially my wife's workmates. "you think too much about it, if you want it just do it". Yes and deal with the consequences later when it's too late? Our view is better to be informed first. We don't like the "i want so i will have" attitude & instead we're more like - "i want but can i actually have....".

    So on to the topic of retirement....

    One of the main points, perhaps even THE main point for having us so unsure is the impact it'll have on our retirement.

    * I'm 34, my wife is 35.
    * I currently have about £9000 in a SIPP with Cavendish plus £1500 in a workplace pension which has minimum contributions paid in. My wife has £7500 in a S&S ISA with less than £1000 in a workplace pension as she joined later (also minimal contributions).
    * I earn about £20.5k gross per year, my wife about £19k. My wife takes home £1300-£1400 in her pocket each month whereas i'm around the £1400-£1500 in the pocket per month before bills
    * I think our bills total around £1300 per month. I worked it out a few months ago and it was around that figure. If i remember right then i also broke down car insurance and tax into monthly payments to include in that figure.


    A great concern of ours is that we'll have very little money aside in retirement so that our quality of life after work would be poor. We're not big spenders by any means. If anything we're actually quite boring but it works fine for us.

    My wife's parents are now in their 50s and have zero set aside for retirement. They struggled all their lives. There's often times where there's just not a spare £10 in the month ... they had 3 kids. The younger 2 being born after my wife was 11-14.

    My parents i remember also struggling. I remember my mother having 2 jobs when i was quite young. My sister was born as i was 7 and my brother as i was 9. In time we seemed to struggle less but that's just how it seemed to me. This didn't coincide with my dad moving to a super paid job or a huge raise or anything. He would've been paid in his later years similar to what i'm getting now (just for 5 day weeks instead of 6 like me). My mother has zero set aside for retirement. My dad always paid in to his pension and by the end he was able to take a monthly pension that they could live off comfortably enough

    So i guess it can be done, right? He's just not around for me to ask more detailed questions and my mother left all the money side to him.



    My wife would be off work for [unknown time period] so the £1300 off my wage leaves not a lot left. I understand that the child gets older obviously and costs change, wife can [at some point] go back to full time work which at that point [whenever that may be] would help ease things.


    So yeah really with the kind of income we have, with our ages and what we have set aside already (not much) i don't know if it's possible to set aside a reasonable amount for retirement. I'm not expecting to be able to draw on £30k per year obviously.

    So is it? Those who may have made it this far and are on similar income - are you/was you able to do it?

    I know of others who have just had kids who either get paid the same as we do or less who are still able to buy things, but it makes me wonder if they only live for the present and not the future and what sort of existence they're in line for come retirement.



    Of course ...... i could get to that retirement day & then drop dead the very next day which would make all this concern about retirement pretty pointless. Shame i don't have a crystal ball.



    Sorry for waffling on so much but i'm struggling to type out what's going through my head at the moment. We know what we want, we just want to be able to afford it .... without the cliche of "you just manage" like some magic trick occurs at the end.
Page 3
    • Not Me Officer
    • By Not Me Officer 15th Jul 17, 11:47 PM
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    Not Me Officer
    There were two main things beyond prudence that struck me about your question: her age and your incomes.

    You wrote about a one year time window so you're probably aware of the risks to the health of both child and mother from delay, as well as the decreasing chance of conception. So no need to write more about this than agreeing that you do have a time limit.
    Originally posted by jamesd
    Yes we're aware of the increased risks at this stage. In addition my wife was premature, born after only 22 or 24 weeks (i forget the exact number but it was one of those) which i understand increases risks further. I'm also sure i remember very very early on in us getting to know each other my wife telling me she was once pregnant but lost the child. It's not the sort of thing that comes easy in conversation or i'd like to bring up - "hey you remember that one time you said to me..." but this has been at the back of my mind also and will probably be in hers too.

    Incomes offer more possibilities. It seems likely that you will end up receiving working tax credit if she isn't working and there's a child. One interesting feature of WTC is that pension contributions increase the WTC payments because the contributions are deducted from the income used in the calculation.
    I spoke with a workmate who tells me they get WTC. I ran a calculator but i must be putting in the wrong info or something because it says we're entitled to £0. Interesting what you said about that and pensions though - i was unaware.


    Your wife having £7500 in an ISA may be a problem because of savings limits for some benefits. Something to check to see whether you might get reduced council tax, say.
    I guess she could just put it into a pension, or would that be seen as hiding assets or whatever it's called?

    So far as the workplace pensions go, try to always do the maximum that gets employer matching. Might be the minimum the law forces the employer to do. By 2018 the legal requirement for employee, employer and tax relief will be eight percent of the relevant band of pay unless the employee opts out. I'll assume that the band is fourteen thousand and that's a regular monthly contribution of 93. Over the same 33 years that produces a pot of 84 thousand. Well worth having.
    Unfortunately so long as we stay with our current employers (which seems likely at the moment) then it'll only ever be the minimum. Still, no money is better than free money so we've stayed in it
    The median average pensioner household income is around 23 thousand a year. You appear to have the potential to get to that level with a bit of initial determination and fairly modest ongoing cost, helped by means tested benefits. Given what appears to be possible I don't think that concerns about eventual retirement income should be a barrier provided you're willing to make the initial substantial commitment and ongoing smaller one.
    Thank you very much for your post. Very helpful.
    I'm the saver of us both so if anything it would be harder for my wife to do that. For the house deposit on such an income i was able to build £40k. This was before my wife's contribution. The mortgage application was put on hold as the bank made enquiries as they couldn't understand how a 20 something on such an income could have such a deposit.

    But like i said. Boring life to the outsiders. I rarely drink, i've never smoked and i was still able to treat myself to things along the way to the £40k and that was with having a lot of time off work too due to medical issues otherwise i would've been around the £50k mark. So having a saving mentality isn't a new idea to me.
    • justme111
    • By justme111 15th Jul 17, 11:57 PM
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    justme111
    Well yes.
    I didn't take their suggestion as literally living on the one income even though their posts suggested that.
    I know we would be eligible for maternity pay. Apparently we wouldn't qualify for tax credits or whatever it's called due to my wage.
    My wife would also go back to work full time (her choice through necessity) as soon as would be possible. I don't know when that would be. I guess perhaps at age 4 when the child goes to primary school. Maybe before if possible.

    But yeah i would have to calculate my wage plus the maternity pay and then use this as a figure to live off month-to-month to see if we could do it. That would be the idea.
    Originally posted by Not Me Officer
    Phew. Sounds good. At the end of the day it depends on whether you two will want a child. A couple of my very good friends decided not to have any. They have a good income but their lifestyle would suffer - they can afford to sleep on the floor now in rented house because they do not have time to furnished it and they like holidays that would be incompatible with children and most importantly they are worried that their life is perfect now and the child will change it drastically and Italy end up in a worse emotional place after. I have just watched " beautiful mund" . Great movie. The message is that maths and calculations are not most important. Love is. Good luck in figuring out your life. X
  • jamesd
    No WTC entitlement yet but that's before the pension contributions that cut the income used and produce the entitlement.

    Moving money from ISA to pension wouldn't be an issue.

    With a savings ratio above sixty percent myself it's easy for me to understand how you could accumulate the deposit.
    • Not Me Officer
    • By Not Me Officer 16th Jul 17, 3:49 PM
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    Not Me Officer
    Yeah it really wasn't hard tbh. If i had a big social life, i chucked my money down the gutter every weekend & smoked it away daily then it would've been a struggle but those aren't my things.

    As i grew up i always knew i didn't want to struggle the same way my parents did. I know that doesn't tie in with having a child but as far as buying a house goes - that's why i stayed at home until i'd turned 30. On my wage it was a necessity. I didn't want to buy a 'starter house' so that i'd have to sell it and get on the next rung .... i wanted to go straight to that next rung. The only way i see us getting better right now is a detached but that's drifting off topic.


    I was thinking on Friday morning as i woke. I don't know whether i read it here or in one of the many child articles i've been reading online this past week or two. At the time i never paid it any mind but it must've connected with my subconscious as i woke on Friday morning with it going through my mind .........

    ....and that is that i am approaching all this as a business deal. I can't help it, it's how i approach anything that costs money. I've always been like that. Sure some times i'll just buy something because i want it & at times i'll look back on things & think well that was a total waste of money, but i often approach things like a business decision - either does it make sense to spend on this or can i afford to spend on this - i want this but it costs a lot, can it work out kind of thing.

    As said, i don't generally get 'excited' over things. I'm not much of an emotional person that way. So that's probably why i keep going back and forth over this as it makes zero business sense but i'd like it to happen lol If that makes any sense
    • RickyB2000
    • By RickyB2000 16th Jul 17, 7:54 PM
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    RickyB2000
    So, what is the ROI on having kids for you? They cost a fortune and will make you poorer than you could have been, so what do you think you will get back by having them?

    It is not just the money. Having kids is hard work. Harder as you get older.

    On the flip side, it is an experience. One of life's most fascinating experiences. Will you lie on your deathbed, surrounded by your money, and regret not having children?

    Could always adopt once your future is financially secure to remove the time pressure.
  • jamesd
    Makes perfect sense on the finance side, though the biggest costs and benefits are to lifestyle and emotions.
    • atush
    • By atush 16th Jul 17, 9:45 PM
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    atush
    You either want to raise a human being, or you dont.

    Finance really doesnt come into it. If it does, it generally means you arent up to it.
    • justme111
    • By justme111 16th Jul 17, 10:20 PM
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    justme111
    it makes zero business sense but i'd like it to happen lol If that makes any sense
    Originally posted by Not Me Officer
    It is called being human . Fascinating, isn't it - it makes no financial sense but you still ponder it and can not put your finger on why you do.
    • Not Me Officer
    • By Not Me Officer 16th Jul 17, 10:46 PM
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    Not Me Officer
    So, what is the ROI on having kids for you?
    Originally posted by RickyB2000
    Abbreviations can be great ... when you know what they mean I generally stick to the standard ones like lol I jump on forums and i'm stumped by so many of them

    They cost a fortune and will make you poorer than you could have been, so what do you think you will get back by having them?
    Achievement, worth, purpose, happiness (& frustration! lol), please don't analyse the words i selected. They were just the ones that came into my head first. I don't want to read any "well [word] should've been your first response" type of over analysing looking for something that isn't there Not saying you would but some do.

    Will you lie on your deathbed, surrounded by your money, and regret not having children?
    I remember as a kid often thinking about death. I remember regularly being in tears as a very small child wondering what would happen if my parents died while i was a kid. As i got older i still thought of and worried about it a lot. Then i finally lost my dad.
    As i get older still i do still think about it probably too much but the focus has now shifted to myself after seeing my dad in the build up to him dying. Will i have anyone? Will my wife be around? How will she be after i'm gone (we generally assume i'll go first but anything can happen)? How will i be once she has gone? Will i be happy with what i did in life (right now i would probably say no)? Who do i leave my small worth to? What if i get dementia like some family members - who will be there for me, anyone, nobody? If i need care, what level will i get? I recently had a family member receive very poor care to the point where it was very dangerous. It was only the fact they had their kids who were out constantly checking in and looking out for them that got it sorted otherwise who knows what would've happened.

    Yeah i think about death quite a bit actually. Probably too much.

    Could always adopt once your future is financially secure to remove the time pressure.
    I don't want to upset anyone here so i'll just say adoption is not for me, and yes i've spoken with my wife about this.
    • Not Me Officer
    • By Not Me Officer 16th Jul 17, 10:52 PM
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    Not Me Officer
    You either want to raise a human being, or you dont.
    Originally posted by atush
    I do actually.

    Finance really doesnt come into it.
    I pretty much accept that my way of thinking and approaching things is different to the vast majority. I can see where they're coming from (i'm not just talking about having kids here btw) but they often can't see or agree or accept where i'm coming from. I'm used to it by now. I don't know why it's/i'm like that but it's how it is. It'd be easier to be like everyone else but that's just how it is. School, work, outside of work, online ... i've found this happening since forever so i'm just used to it by now.
    So for me in this situation, i do want a child but finance does come in to it for me and it's something we're going to have to figure out or time will just decide for us, simple as that really. I'm a self confessed worrier, have been all my life. So when people in similar situations to myself say "later life? Forget that i'll deal with that when it comes", i can't do that. I worry about the now, i worry about the future. Unless i get it straight in my head that it CAN work, that's all i need - that it CAN, not necessarily will but that it's possible to work, then i worry. If i see that it is possible in my situation then i do what i can to make it work. If i see that it's impossible then i just accept the fact.

    Hope that makes some sense?
    Last edited by Not Me Officer; 16-07-2017 at 10:54 PM.
    • justme111
    • By justme111 17th Jul 17, 7:55 AM
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    justme111
    It makes perfect sense NMO. It is not as black and white like "you either want to or not" for many of us. May be even for most. There are "wants" on different levels . In my case having a child when I had her was due to circumstances and calculations. I did not go into a detailed calculatuons with numbers. It was enough for me to know that most likely my income alone will be enough to bring the child up. As it happened I lived in a houseshare during a good part of my pregnancy but I jsd a plan which in my mind had close to 100% chance to suceed. As it happens it did on that occasion but since then I have seen that even the best of planning can go wrong. I feel the way we think or better saying not think about death is surprising , probably a result of society conditioning. You are a bit different but it is not different in a bad way and you are not alone as I am sure you know already.
    Last edited by justme111; 17-07-2017 at 8:02 AM.
    • enthusiasticsaver
    • By enthusiasticsaver 17th Jul 17, 8:41 AM
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    enthusiasticsaver
    We had 2 children very close together but when we were younger than you, aged 26 and 27. We knew we wanted children, we were both earning roughly the same at just average earnings and owned a small two bed terrace property in Greater London in the 80s with a mortgage. We both had occupational pensions but no real savings.

    Our thoughts for having children realatively young by today's standards (not that young then though) was we would have time to sort out retirement provision once they were grown up and hopefully mortgage paid off. We followed our life plan almost exactly and husband is now retired at 58 on 2/3 of his salary and I retire the end of this year on about 50% of mine. We have a large savings buffer, no debt or mortgage and both children are now financially independent and one is married with a child of her own and they both own property.

    I think it is possible to do both but decisions need to be made along the way. If you want children and are mid 30s I personally wouldn't wait any longer not just because biology dictates for your wife she will fall pregnant easier if she is younger but also because approaching retirement with little savings or pension provision and children who are still financially dependent is a perfect storm. Having only one will make it easier and making pension payments as much a priority as mortgage and utility bills is important. Whatever your friends say we have only been able to retire 8 years early because we prioritised pension payments sometimes at the expense of other stuff. We would holiday cheaply one year and go for something more expensive every other year. My husband had a company car but until recently I always made do with cheaper used cars and we always budgeted well and had no debt. Entertainment costs were kept low - DVD at home with bottle of wine weekly except for special occasions and I never splurged on makeup, clothes etc. It can be done
    Debt and mortgage free and saving for early retirement
    • enthusiasticsaver
    • By enthusiasticsaver 17th Jul 17, 9:46 AM
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    enthusiasticsaver
    One thing I would say is the quality of retirement is not just determined by money. Adequate finances for your lifestyle but other things to consider are your health and your family, neither of which are affected by finances. Our children and granddaughter are a source of joy I would not exchange for a few extra thousand on our pensions. There are always trade offs in life, a bigger house or a better car, a foreign holiday or university fees for your kids. We all make choices but I would find it very hard to sacrifice having children for a better pension. We have enough now but if need be we would have worked longer if not.
    Debt and mortgage free and saving for early retirement
    • PuzzledDave
    • By PuzzledDave 17th Jul 17, 10:27 AM
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    PuzzledDave
    I admit I have not read the whole thread, but here is my size 12 boots anyway.

    In terms of child costs, try to keep this in mind:




    For a good and early retirement, I'll echo others on here: concentrate more on your spending and less on your income. Try not to compare your life to the others you mentioned who seemed comfortable, you can have little idea how rich or debt laden they really are.

    My personal best money saving tip is to throw the TV out. We chucked ours out about 10 years ago before the kids came along and they have no desire at all for the latest toy or trip to expensive land. They honestly love to play with my ancient toy soliders and lego and the wifes old childhood toys. So do the kids friends when they visit.

    Before the big holiday, new fancy phone, new car - ask yourself honestly: Is this really worth making myself poorer when I am old ?

    When you are able to cut back on luxury goods/clothes/electronics/meals out to fancy places - your pension savings are easy and grow fantastically fast. Do this and in 10-15 years you will see days when your pension earns more money than you do.
    • RickyB2000
    • By RickyB2000 17th Jul 17, 12:58 PM
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    RickyB2000
    Abbreviations can be great ... when you know what they mean I generally stick to the standard ones like lol I jump on forums and i'm stumped by so many of them

    Achievement, worth, purpose, happiness (& frustration! lol), please don't analyse the words i selected. They were just the ones that came into my head first. I don't want to read any "well [word] should've been your first response" type of over analysing looking for something that isn't there Not saying you would but some do.

    I remember as a kid often thinking about death. I remember regularly being in tears as a very small child wondering what would happen if my parents died while i was a kid. As i got older i still thought of and worried about it a lot. Then i finally lost my dad.
    As i get older still i do still think about it probably too much but the focus has now shifted to myself after seeing my dad in the build up to him dying. Will i have anyone? Will my wife be around? How will she be after i'm gone (we generally assume i'll go first but anything can happen)? How will i be once she has gone? Will i be happy with what i did in life (right now i would probably say no)? Who do i leave my small worth to? What if i get dementia like some family members - who will be there for me, anyone, nobody? If i need care, what level will i get? I recently had a family member receive very poor care to the point where it was very dangerous. It was only the fact they had their kids who were out constantly checking in and looking out for them that got it sorted otherwise who knows what would've happened.

    Yeah i think about death quite a bit actually. Probably too much.

    I don't want to upset anyone here so i'll just say adoption is not for me, and yes i've spoken with my wife about this.
    Originally posted by Not Me Officer
    ROI - return of investment. Often used in business cases.to justify spending X amount of money on something. So in this case you estimate how much they will cost (plus the opportunity cost of not spending that money elsewhere) and offset by what you gain (e.g using Jamesd's plan to claim WTC etc). Plus the emotional side of things.

    You could also take the Family Guy approach:

    - have as many kids as you can, 'cuz that makes it more likely that one of those kids'll grow up an make it big in Hollywood. Then who's payin' the bills huh? Hollywood Kid.
    No, no over analyzing. Just making you think about why you really want them. It is a big scary decision money or not - as your life is no longer your own. Maybe you are just afraid of the unknown and finding excuses to prevent doing what deep down you want to do? I do this sort of thing all the time - look at all the things that could go wrong and paralyze myself from doing something I really do want to do or something that everyone else would just jump in and get on with. It is hard being an over-analyzer!

    Death - as I get older I dwell on it more and more. No guarantee having kids will help - they may decide they just want their inheritance and bung you in an awful home (though that may reflect more on your parenting style if they do). But do it right, and hopefully you will get that fulfillment you don't yet have.
    • xylophone
    • By xylophone 17th Jul 17, 2:03 PM
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    xylophone
    Having a child is giving a hostage to fortune.

    Fortune may bring joy or sorrow, riches or poverty.

    It is simply impossible to tell.

    One other point, having a child is not wholly within your choice or control - nature can be cruel.

    You sow a seed and wait...... sometimes the harvest fails....sometimes it's poor, sometimes it's abundant.

    Over to you.
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