Taking care of parent's retirement

conradmum

There's nothing to stop you putting aside a little money every month with the intention of using it as a 'gift' fund when your parents retire. You could pay for things as and when they need them, then. For example, I would think offering to buy a weekly shop every now and then would be a really good way of helping them out.

The money would still be yours and you would pay tax on the interest as normal but your parents would know they had a cushion should they need one.

And my two penn'orth - my parents left school at 15 and 13, would describe themselves as uneducated and would feel no shame at being described as such on an internet forum. They built a successful business and retired much younger than I will ever be able to afford to.

seven-day-weekend

If your parents are in their mid-50s, they will both be 65 before they reach State Retirement age. They may well have more than you think.

I agree with others, get a State Pension forecast here:
http://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/StatePensionforecast/DG_10014008

choc_mouse

Wow, didn't expect to get so many replies so quickly.

Could be a culture thing but the offense that may have been caused was not intentional - apologies to those who it offended In my defence, my parents had limited schooling. My mum always admits to friends that her family couldn't afford to send her siblings to school so only her brothers could go and my dad only had basic education (no qualifications). But you're right they did successfully bring up 3 children in a foreign country and have managed to feed us to this day, for which I am grateful.

Anyway, thanks for the advice offered so far. My mum has recently discussed with me about old age and financial security was one worry for her - in fact she even said she'll need to rely on us. I might not know what their exact financial situation is but I have a fairly good idea of it and that once my dad stops working, bills and everyday expenses will start becoming my(our) responsibility.

I didn't know about the pension forecasts but looks like a good place to start.

sleepless_saver

This link tells you more about pension forecasts and how to get them.

As they have a good few years to go before retirement and less in the way of bringing up family expenses, can they not start to put money aside for retirement themselves?

Errata

choc_mouse wrote: »

Wow, didn't expect to get so many replies so quickly.

Could be a culture thing but the offense that may have been caused was not intentional - apologies to those who it offended In my defence, my parents had limited schooling. My mum always admits to friends that her family couldn't afford to send her siblings to school so only her brothers could go and my dad only had basic education (no qualifications). But you're right they did successfully bring up 3 children in a foreign country and have managed to feed us to this day, for which I am grateful.

Anyway, thanks for the advice offered so far. My mum has recently discussed with me about old age and financial security was one worry for her - in fact she even said she'll need to rely on us. I might not know what their exact financial situation is but I have a fairly good idea of it and that once my dad stops working, bills and everyday expenses will start becoming my(our) responsibility.

I didn't know about the pension forecasts but looks like a good place to start.

There are benefits which will be available to your parents in addition to the state retirement pension. eg housing and council tax benefit.

I understand that there may be cultural reasons why your parents expect you to pay their bills and everyday expenses but wonder what they plan to spend their pensions on ? Perhaps you need to give some thought to how long you will be expected to support them, because with good health you could be doing it for 30 years.

zygurat789

I don't think you will get any tax relief on payments made into a pension for your parents, however, if you pay £2,880 pa into a stakeholder pension for each of them then HMRC will add another £720 pa to each one. With 10 years of this there should be a pot of £40,000+ each generating an income of (say)
£2,600pa

margaretclare

There's a big difference between 'helping' one's parents in retirement and this statement:

It appears they will be relying on their children (e.g. me) to get them through the final stages of life.

and

in fact she even said she'll need to rely on us

This is a dreadful responsibility to put on any young person.

Incidentally, about the 'poor and uneducated' bit. Going back to my grandparents in the late 19th century, they went to school when they could but left by age 12 at latest and even then, didn't go to school in harvest-time and other times when they were needed to earn money. They were straight out to work, the boys to farms and the girls into what was euphemistically called 'service' as per 'Upstairs Downstairs'. That's the background I come from, and I also grew up in poverty.

Bogof_Babe

Given the comment about expecting their offspring to support them in old age, I wonder if the OP's parents are first generation immigrants, in which case it is quite possible that they did not receive the sort of education that we consider the norm.

We are also assuming that they (the parents) do live in this country, and that they are currently in employment. I imagine they do live here if they are entitled to a state pension, but would they receive one in a Commonwealth country too?

I think it is a very generous intention, but as margaretclare points out, better not to commit yourself to supporting them for the rest of their lives. Building up some sort of fund for them is one thing, making regular donations for the rest of their lives could turn out to be a millstone around your neck.

EdInvestor

Bogof_Babe wrote: »

Given the comment about expecting their offspring to support them in old age, I wonder if the OP's parents are first generation immigrants, in which case it is quite possible that they did not receive the sort of education that we consider the norm.

...and also quite possible that they don't know about the type of pension arrangements routinely available to the less well off in developed countries, but not available in poorer countries, where families are still expected to look after elderly relatives.

choc_mouse

Bogof_Babe wrote: »

Given the comment about expecting their offspring to support them in old age, I wonder if the OP's parents are first generation immigrants, in which case it is quite possible that they did not receive the sort of education that we consider the norm.

You're spot on that my parents are first generation immigrants. Parents are now as British (nationality wise) as one can get these days as they have lived and worked in the UK for over 30 years. I didn't realise retirement was so complicated! That's why I came here for advice

It appears I'm in the middle of two cultures...but cultural expectations aside (I don't really want to discuss ethics and cultural behaviours on a finance forum), I need to find the best way to maximise their retirement fund -> I've been advised to get them their pension forecasts which I shall do after the holidays.

From what zygurat789 said, my parents could potentially get an extra £50/week if invested correctly but come to think of it, I think I could comfortably afford the same amount out of my current salary. One question I should ask myself is what they expect. I would think the basics would be enough, as they always watch every penny and rarely indulge in luxury goods.

Thanks all for the advice offered. Given me plenty to think about