Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • ams25
    • By ams25 3rd Oct 17, 9:32 PM
    • 100Posts
    • 85Thanks
    ams25
    Early Retirement.... with Young Children. Does this feel reasonable?
    • #1
    • 3rd Oct 17, 9:32 PM
    Early Retirement.... with Young Children. Does this feel reasonable? 3rd Oct 17 at 9:32 PM
    I read lots here about people waiting until the children have finished university before they feel its safe to retire/stop full time work. My situation is different.

    I had children relatively late (early/mid 40s) and I have stopped working (at 52) - with 2 primary school age children (6+10). I might be getting the SP just as my youngest is finishing uni (if he goes)!. The upside of this (unplanned) approach is that i was able to save more when younger (no kids) and those savings have had the benefit of the magic of compounding... plus I now get to enjoy more time with the kids while relatively young.

    While I think I have the financial cover to maintain our current standard of living including the cost of the children, I have to admit its an area where I may not have everything fully covered - so would value the view of the board on this in case I am missing some major cost factor.

    My tracking of expenses over the past couple of years is that the children (both) are adding around £13k pa to our budget, which seems consistent with some of the "costs of raising a child" articles you see. We spend more on the kids than we do on ourselves and given some folk are looking to retire on this or not much more, it feels like a decent amount. We have no childcare costs - as i am around for that and not looking at private schools, so this covers clothes, toys/gifts, school and after school activities, food, holidays, eating/going out, kids parties etc. We live in London so everything is expensive
    My expectation is that this will increase as they get older, but unsure how much. c.15% is my expectation but I am guessing as have not had older kids! (some things should be cheaper too... less on toys.. more on food, going out?)

    When it comes to university, if they want to go, good chance the situation will have changed 8-10 years from now, but I have assumed I would need c.£40-50k each in todays money to support tuition fees and living costs for 3 years. I know the Martin Lewis advice is not to pay the tuition fees upfront, but provide support with the repayments if required later, but would aim to be covered either way. Help with house deposits etc might potentially come from downsizing our current home when the kids are older so not worrying about that for now.

    My question is do you think I have realistic expectations of the ongoing costs for the children or am I missing something.

    Thanks.
    Last edited by ams25; 03-10-2017 at 9:34 PM.
Page 1
    • venison
    • By venison 3rd Oct 17, 11:03 PM
    • 1,356 Posts
    • 1,445 Thanks
    venison
    • #2
    • 3rd Oct 17, 11:03 PM
    • #2
    • 3rd Oct 17, 11:03 PM
    As far as uni goes you should not budget to pay tuition fees let them borrow the money for that, they have just announced that they are increasing the repayment threshold from 21k to 25k a year earnings, and are looking at both the interest rates on that and also taking another look at the student loans system my bet is they will bring back some maintenance grants. Also when they reach 16 you should encourage them to find part time jobs so they can pay for their own entertainment, from experience kids do get cheaper to run as they get older BUT they rarely stop costing you something even in their 20's and beyond !
    I am now a Board Guide on the Credit card board and the Loan board and Benefits board (But give me time to learn the ropes thanks).
    • ams25
    • By ams25 4th Oct 17, 9:46 AM
    • 100 Posts
    • 85 Thanks
    ams25
    • #3
    • 4th Oct 17, 9:46 AM
    • #3
    • 4th Oct 17, 9:46 AM
    As far as uni goes you should not budget to pay tuition fees let them borrow the money for that, they have just announced that they are increasing the repayment threshold from 21k to 25k a year earnings, and are looking at both the interest rates on that and also taking another look at the student loans system my bet is they will bring back some maintenance grants. Also when they reach 16 you should encourage them to find part time jobs so they can pay for their own entertainment, from experience kids do get cheaper to run as they get older BUT they rarely stop costing you something even in their 20's and beyond !
    Originally posted by venison
    Thanks. I agree on the current basis does not make sense to pay up front... will have to see what it all looks like in 8 years. And if Jezza is in power it will all be free anyway!! (just have to worry about the taxes and high inflation)

    I had a paper-round from about 12, good for the early work ethic, so will be pushing the kids to get some part time work. Not sure how much demand there is for paper boys/girls these days, let alone a few years hence. I used to wash cars, caddy at the local golf course and worked in a local shop. What do kids do these days?
    • OldMusicGuy
    • By OldMusicGuy 4th Oct 17, 10:14 AM
    • 201 Posts
    • 367 Thanks
    OldMusicGuy
    • #4
    • 4th Oct 17, 10:14 AM
    • #4
    • 4th Oct 17, 10:14 AM
    Regarding uni, my son has just finished. We made him take out a loan for tuition fees for two reasons. First, it would give him some "skin" in the game as he would be spending his "own" money to be at uni. Second, the repayments are not onerous, especially if he didn't get a well paid job.

    We did subsidize his rent and living costs which came to around £9K per annum.

    I used to wash cars, caddy at the local golf course and worked in a local shop. What do kids do these days?
    Originally posted by ams25
    My son from age 18 on has done freelance SEO content creation. Not a massive earner but a good way of earning topup cash and it fits well with studying.
    • stoozie1
    • By stoozie1 4th Oct 17, 10:28 AM
    • 394 Posts
    • 258 Thanks
    stoozie1
    • #5
    • 4th Oct 17, 10:28 AM
    • #5
    • 4th Oct 17, 10:28 AM
    I understand why some of the previous posters are warning about overcontributing to children's Uni costs, but I'd advise you run your income through the calculator to see how much possible loan would be reduced by because of your earnings, as you'll have to top them up by that much, even if they sef-fund the rest.
    • atush
    • By atush 4th Oct 17, 12:06 PM
    • 16,375 Posts
    • 10,134 Thanks
    atush
    • #6
    • 4th Oct 17, 12:06 PM
    • #6
    • 4th Oct 17, 12:06 PM
    I know the Martin Lewis advice is not to pay the tuition fees upfront, but provide support with the repayments if required later,
    Not sure if Martin's opinion still flies- now that interest rates for new loans are 6% or more. Nor letting them borrow at that rate which is higher than a SVR mtg.

    University is expensive, and we had to delay our retirment because we had kids late.
    • ams25
    • By ams25 4th Oct 17, 2:04 PM
    • 100 Posts
    • 85 Thanks
    ams25
    • #7
    • 4th Oct 17, 2:04 PM
    • #7
    • 4th Oct 17, 2:04 PM
    I understand why some of the previous posters are warning about overcontributing to children's Uni costs, but I'd advise you run your income through the calculator to see how much possible loan would be reduced by because of your earnings, as you'll have to top them up by that much, even if they sef-fund the rest.
    Originally posted by stoozie1

    Thanks. Unless I go back to work, I don't expect to have any earnings - my income will be a combination of DB pension, SIPP drawdown and ISA savings (interesting how you declare that). If I understand it right, my children could get a maintenance loan as well as tuition fees loan, but all repayable in the same way. Even if my taxable earnings were low, would my children be entitled to anything other than a larger loan?
    • ams25
    • By ams25 4th Oct 17, 2:09 PM
    • 100 Posts
    • 85 Thanks
    ams25
    • #8
    • 4th Oct 17, 2:09 PM
    • #8
    • 4th Oct 17, 2:09 PM
    Not sure if Martin's opinion still flies- now that interest rates for new loans are 6% or more. Nor letting them borrow at that rate which is higher than a SVR mtg.

    University is expensive, and we had to delay our retirment because we had kids late.
    Originally posted by atush
    Thanks. So - with the current tuition fees approach - is around £55k (each) in todays money looking about right. ie £9k each for tuition fees and living costs (if you avoid the loan) so c.£18k pa. (x3)
    • stoozie1
    • By stoozie1 4th Oct 17, 2:52 PM
    • 394 Posts
    • 258 Thanks
    stoozie1
    • #9
    • 4th Oct 17, 2:52 PM
    • #9
    • 4th Oct 17, 2:52 PM
    Thanks. Unless I go back to work, I don't expect to have any earnings - my income will be a combination of DB pension, SIPP drawdown and ISA savings (interesting how you declare that). If I understand it right, my children could get a maintenance loan as well as tuition fees loan, but all repayable in the same way. Even if my taxable earnings were low, would my children be entitled to anything other than a larger loan?
    Originally posted by ams25
    So it's only the ISA income that wouldn't be counted, but it sounds like you think you're below the threshold (£25k)where the loan amount would be reduced.

    For anything other than a larger loan, I only know of bursaries in teaching and medicine/nursing.
    • Northamptonblue
    • By Northamptonblue 5th Oct 17, 8:20 AM
    • 24 Posts
    • 47 Thanks
    Northamptonblue
    Our younger son is currently at Uni. We had saved a decent sum to subsidise his living expenses and expect him to take out loans for tuition fees and the small amount he is allowed to borrow. We were keen that he only borrowed from Student Loans due to the repayment terms. He chose medicine and got into Oxford on a six year degree. The cost of living is high, however, and even though he is frugal, we estimate a £50,000 contribution from us will be the final tally. Obviously, other degrees and locations will be less expensive but you are right to factor in a large cost.

    Wouldn't have it any other way though and can't think of a better way to spend our savings.
    • atush
    • By atush 5th Oct 17, 12:20 PM
    • 16,375 Posts
    • 10,134 Thanks
    atush
    Thanks. So - with the current tuition fees approach - is around £55k (each) in todays money looking about right. ie £9k each for tuition fees and living costs (if you avoid the loan) so c.£18k pa. (x3)
    Originally posted by ams25
    All depends on where they go. Some places like London are more expensive than others re living costs.

    But I found (as I was used to feeding them anyway) that I could pay most if not all living costs from income at the time they went. With savings paying the big upfront costs. Was a little harder with the twins as there were 2 at once.

    But you cant do this if retired, so that is why I suggest working longer, or taking PT work a the time they are at Uni.

    But if you do put away that amount for each child you have a fighting chance as it will continue to be invested while they are there so the pots might grow?
    • michaels
    • By michaels 5th Oct 17, 12:37 PM
    • 19,931 Posts
    • 91,378 Thanks
    michaels
    You need to have a very hard look at your income and how it relates to tax credits and you need to do this now rather than wait until universal credits for families is rolled out. If you are assessed under universal credit then any savings will count as capital and anything over 16k will remove your eligibility for child tax credits.

    Pension income will be counted as income thus reducing your child tax credits entitlement but drawdown and any income made on savings in ISAs is not. Thus initially if you can keep your 'tax credits assessed' income down by living off isas, savings and drawdown then you will get about 6k pa of child tax credits from the govt. You may also qualify for free school meals, free music lessons, free school trips etc etc which is very good for your kids schools as they will then get £1000 pa for each child extra funding. Later when your kids are at uni they will then qualify for the full maintenance loan.

    So my advice is check this out very carefully, 6k from the govt for 8+ years is a decent sum.

    Oh and you can also use the 3.6k gross pension contribution (2880 grossed up by the govt) for non-earners and take this off any income you do get that is counted for tax credits purposes to help you minimise any counted earnings.

    And you may even qualify for things like the £140 warm homes energy discount and reductions in your water bills for low income families if your 'relevant income' is below 16k.
    Cool heads and compromise
    • AnotherJoe
    • By AnotherJoe 5th Oct 17, 4:49 PM
    • 7,673 Posts
    • 8,286 Thanks
    AnotherJoe
    Not sure if Martin's opinion still flies- now that interest rates for new loans are 6% or more. Nor letting them borrow at that rate which is higher than a SVR mtg.

    University is expensive, and we had to delay our retirment because we had kids late.
    Originally posted by atush
    It still holds because the 6% is an irrelevance as far as what gets paid back except for a small % of very high earners. Read his articles in here. Paying it off because it's gone up to 6% is a classic mistake unless you are one of the few very high earners
    • enthusiasticsaver
    • By enthusiasticsaver 6th Oct 17, 4:55 AM
    • 4,844 Posts
    • 9,147 Thanks
    enthusiasticsaver
    Repaying student loans is based on earnings so I would advise you do not pay the tuition fees upfront and get them to apply for the maintenance loan. This may all change by the time your children reach 18 but in many cases these loans will never be paid off if the graduate does not get a high paying job afterwards.

    Our daughters were on the old scheme and we supported them with monthly allowances to subsidise the maintenance loan and initially paid tuition fees up front then once they were both at uni together as only one school year between them we let them take out loans for last year.

    Our elder daughter did post grad qualifications and earns a very good salary so is paying back a substantial amount each month. Our youngest chose to move back to the West Country and is now married with a child and only works part time so is not paying any of it back. Paying upfront would have been a mistake in her case. As I said though this is the old scheme and the interest rate is 1.5%
    1 week to go until early retirement. Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • AnotherJoe
    • By AnotherJoe 6th Oct 17, 9:47 AM
    • 7,673 Posts
    • 8,286 Thanks
    AnotherJoe
    Repaying student loans is based on earnings so I would advise you do not pay the tuition fees upfront and get them to apply for the maintenance loan. This may all change by the time your children reach 18 but in many cases these loans will never be paid off if the graduate does not get a high paying job afterwards.

    Our daughters were on the old scheme and we supported them with monthly allowances to subsidise the maintenance loan and initially paid tuition fees up front then once they were both at uni together as only one school year between them we let them take out loans for last year.

    Our elder daughter did post grad qualifications and earns a very good salary so is paying back a substantial amount each month. Our youngest chose to move back to the West Country and is now married with a child and only works part time so is not paying any of it back. Paying upfront would have been a mistake in her case. As I said though this is the old scheme and the interest rate is 1.5%
    Originally posted by enthusiasticsaver
    The interest fee makes no difference if she isnt going to pay it off before the 30 years is up. Once the amount it increases by is bigger than what is being paid off, orv even if it isnt but the rate its being paid back means it wont be paid back in 30 years, it makes no difference if the interest rate is 1.5% or 15% or 150% because the payment stays the same.

    Lets say she owes £30k and is paying it off at £500 a year. She's no worse off than if she owes £60k and is paying it off at £500 a year, because after 30 years, both debts are wiped and she has paid the same amount in either case because how much she pays isn't related to the size of the loan (unlike a normal loan, where in that example she'd be paying double for the latter).

    As ML points out, its essentially just a graduate tax now, and the size of the loan, apart from a small minority of high earners, is irrelevant.
    Last edited by AnotherJoe; 06-10-2017 at 10:59 AM.
    • michaels
    • By michaels 6th Oct 17, 3:32 PM
    • 19,931 Posts
    • 91,378 Thanks
    michaels
    I guess it depends if you think your kids are in the 15% who will earn enough to pay it all back. For them it would be much cheaper to borrow the money from you at its marginal cost (2%?) than from the govt at 6%+. For the other 85% it makes more sense to borrow from the govt and never pay it (all) back.
    Cool heads and compromise
    • atush
    • By atush 6th Oct 17, 5:23 PM
    • 16,375 Posts
    • 10,134 Thanks
    atush
    It still holds because the 6% is an irrelevance as far as what gets paid back except for a small % of very high earners. Read his articles in here. Paying it off because it's gone up to 6% is a classic mistake unless you are one of the few very high earners
    Originally posted by AnotherJoe
    Nope, not believing this.

    All 3 of mine are graduated, and all 3 make enough to pay off loans (if they ahd them). Many of their friends too. None are publc school kids, with parental old boy networks.

    Sure people who took degrees that dont lead to well paid work wont be paying it back, but mine all got grad jobs and are earning well enough to pay.

    So quite happy they arent having 6%+ loans to pay.
    Last edited by atush; 07-10-2017 at 12:29 PM.
    • AnotherJoe
    • By AnotherJoe 6th Oct 17, 6:33 PM
    • 7,673 Posts
    • 8,286 Thanks
    AnotherJoe
    What don't you believe?
    The numbers?
    That oniy a minority pay it back? Take it up with ML. I doubt his numbers are wrong.
    Found this study that says 75% don't pay it off.
    http://www.independent.co.uk/student/graduates-three-quarters-never-pay-off-debt-loan-maintenance-grant-institute-for-fiscal-studies-a7824016.html
    • michaels
    • By michaels 6th Oct 17, 11:06 PM
    • 19,931 Posts
    • 91,378 Thanks
    michaels
    The proposal to increase the threshold to 25k index linked means an even smaller proportion will ever pay it all back.
    Cool heads and compromise
    • atush
    • By atush 7th Oct 17, 12:32 PM
    • 16,375 Posts
    • 10,134 Thanks
    atush
    What don't you believe?
    The numbers?
    That oniy a minority pay it back? Take it up with ML. I doubt his numbers are wrong.
    Found this study that says 75% don't pay it off.
    http://www.independent.co.uk/student/graduates-three-quarters-never-pay-off-debt-loan-maintenance-grant-institute-for-fiscal-studies-a7824016.html
    Originally posted by AnotherJoe
    It is specualtion, as those who pay the higher rate only graduated a few years ago and thos graduating int he future. None of them have been working long enough to say if they will pay if off or not.

    My point was, and remains, mine WOULD have to pay it all plus the 6%+ interest.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

318Posts Today

2,071Users online

Martin's Twitter