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Learning to spend

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  • Anonymous101Anonymous101 Forumite
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    Triumph13 wrote: »
    If the wealth is properly managed (and you don't have too many kids) then it can be made to last for many generations - as the aristocracy have shown.

    I am aiming to try and get a generation-skipping approach going myself. Anything my parents leave won't be needed by me as I'm already retired, but will make a big difference to my kids, hopefully getting them on the road to FI With luck they will be FI by the time we die and so anything we leave can go to their kids and so on.

    This is of course grossly unfair on the children of families who don't have any significant money to inherit, which is why I'm a big supporter of inheritance tax to stop it getting out of control.



    I agree this is a great approach and something I too will look to establish with my children. I won't be getting a significant inheritance but I do have a wealth of knowledge about F.I. to impart into my children and raise them in such a way that they are much more likely to achieve F.I. at an earlier age than I did. The key thing for me is the passing of the mind-set and knowledge of how to achieve F.I. Once it is established as the aristocracy which you referenced showed this can be maintained for generations.


    Additionally as the F.I retiree ages and hopefully has a larger and larger surplus of money they will be in a position to pass a lot of that wealth onto their children and aid their F.I. efforts. Not to mention that if drawing down on investments rather than purchasing of annuities then there will likely be residual wealth to be inherited rather than lost to companies.
  • jimi_manjimi_man Forumite
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    Sea_Shell wrote: »
    I agree. This "rump" as you call it is not sustainable for the coming generations. If you take the following example.

    Parents have paid for house, good pensions and can retire early.
    Their 2 adult children are currently renting or have large mortgages.
    Children eventually inherit the house, say 50/50, and maybe come out with £200k each.
    They use this money towards a house of their own.
    They have a home, but no cash savings or investments or pensions.
    They can't retire early.

    This "boom" of wealth gets split and watered down as it passes through the next generations, till it's all gone!
    I disagree with this. I think someone may have already mentioned this but people are having children later and living longer. Consequently inheritances are happening much later too - often when the children are probably settled financially and maybe their children may benefit from the money more.
  • ianthyianthy Forumite
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    I am really enjoying reading this thread. My OH says we have been in jam tomorrow for years and now it's time to spend more. It's easier said than done - we are currently selling the family home and downsizing - which will trigger some spending on renovation works but will leave a sizable sum. Since last year we have been upscaling - better holiday accommodation, nicer restaurant, better taxi services etc., It does take a conscious decision to actually commit to the spend more and then enjoy it.
  • GSPGSP Forumite
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    It's more difficult now, but retiring people also seem to forget how difficult it was for them to get on the housing ladder themselves all those years ago. In most cases going down to one wage when the kids came along made it more of a challenge to juggle finances to get through each month.
    It was only in the latter stages of their work life where things began to get easier with the kids supporting themselves more and the OH going out to work.
    Nowadays, I hear more of both young parents having to go out to work while people of our age look after their kids more.
    As regards to trouble spending retirement money, just remember you can't take it with you. What a waste, all that squirreling for nothing, apart from your kids who would much rather you enjoy yourselves.
    Enjoy it more now being more mobile and able to get around better.
    Enjoy it more now as you will be in better health.
  • DT2001DT2001 Forumite
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    DairyQueen wrote: »
    This thread so resonates with me

    We have therefore decided that when the current properties are sold we will 'up value' and purchase our dream property. Home is a priority for us both.

    These are the first steps toward decumulation and we are hopeful that they will help us to adjust without that slight feeling of panic about running out of money.
    .

    Whilst I commend the use of funds to do what you want i.e. buy your dream house, having accumulated funds over time, it is, playing devils advocate, just purchasing a different asset!

    I, like so many on this forum calculate different retirement scenarios. I utilise the forum’s wisdom however I have chosen to ignore my home as a potential source of capital. It is a fallback position should the future investment returns be very poor. I know we’ll not spend our expected income however OH likes her work so still accumulating. Decumulation will have to be by gifting to children.
  • DT2001DT2001 Forumite
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    Triumph13 wrote: »
    If the wealth is properly managed (and you don't have too many kids) then it can be made to last for many generations - as the aristocracy have shown.

    I am aiming to try and get a generation-skipping approach going myself. Anything my parents leave won't be needed by me as I'm already retired, but will make a big difference to my kids, hopefully getting them on the road to FI With luck they will be FI by the time we die and so anything we leave can go to their kids and so on.

    This is of course grossly unfair on the children of families who don't have any significant money to inherit, which is why I'm a big supporter of inheritance tax to stop it getting out of control.

    My MIL has amend!d her will to jump a generation for a considerable part of her estate.
    I think IHT at a reasonable level is OK however the more you tax the more those with greater funds will pay for advice to ‘hide’ and avoid ‘legitimately’ this tax burden.
  • TerronTerron Forumite
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    I am a baby boomer, and things weren't as good as some people seem to imagine.


    In my first job the pension scheme was only open to managers. I started a private ones, bu they were DC not DB.


    Getting on the housing ladder wasn't that easy, certainly not as easy as the decade before the credit crunch. I managed it in 1989 - just before the biggest housing crash in history. I went into negative equity on that flat, and lost a little on my second. Only with my third home will I have made a profit (currently selling it).


    My second job had a FS pension, but that has not turned out as good as expected. Increases once the pension is in payment are "enturely at the discretion of the trustees". They have given two 1% rises in the last 17 years. That DB pension is not so decent.



    In my third job there was a hybrid pension. The DB underpin was 1/80th of salary rather than the 1/60th of normal FS schemes. Still the underpin applies as it did better than the DC part. The scheme was ended before I left the company so I had 9 years in it. The company agreed to extend the legal requirement on rises once in payment to all yeats, that is CPI with a cap of 5%.


    Having had parents who grew up during WW2, experienced a large drop in our lifestyle due to the inflation of the 70s and lost my savings on my first property I was fairly thrifty. I did not increased my spending as my income increased, Rather I saved a lot. I inheirted a bit from my parents and when I lost my job put that and a lot of my savings to work. Thus I have a good income now.


    My sisters went a different route. They both became teachers and got DB pensions with full indexation. That route is still open.



    My neice is earning more than I did at her age, even allowing for inflation. I don't know about her pension, but she is trying to buy a flat in London in her 20s and has a reasonable chance of doing so.
  • swindiffswindiff Forumite
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    We will be in the lucky position of not really having to decumilate a pot of money as both our main pension and SP are DB. So still pretty much getting a guaranteed wage each month but without the hassle of having to go to work for it. There will be the possibility of inheritance from parents, if this does come we will be in the position then to hopefully get our own children on the housing ladder.
  • Parking_TroubleParking_Trouble Forumite
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    GSP wrote: »
    It's more difficult now, but retiring people also seem to forget how difficult it was for them to get on the housing ladder themselves all those years ago. In most cases going down to one wage when the kids came along made it more of a challenge to juggle finances to get through each month.
    It was only in the latter stages of their work life where things began to get easier with the kids supporting themselves more and the OH going out to work.
    Nowadays, I hear more of both young parents having to go out to work while people of our age look after their kids more.
    As regards to trouble spending retirement money, just remember you can't take it with you. What a waste, all that squirreling for nothing, apart from your kids who would much rather you enjoy yourselves.
    Enjoy it more now being more mobile and able to get around better.
    Enjoy it more now as you will be in better health.

    We all maxed out our borrowing to get on the housing ladder. 100% mortgage, 4 x combined income?

    It was considered worth stretching yourself. These days you have no choice because house prices have outstripped wages. Plus lenders are much more risk averse.

    It was a lot easier back then, including moving up the ladder because the leap to the next level was far, far less.
    Mr Straw described whiplash as "not so much an injury, more a profitable invention of the human imagination—undiagnosable except by third-rate doctors in the pay of the claims management companies or personal injury lawyers"

  • Parking_TroubleParking_Trouble Forumite
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    Terron wrote: »
    I am a baby boomer, and things weren't as good as some people seem to imagine.

    Net result is that you and your sisters are a lot better off than someone starting in the last couple of decades.

    It wasn't always easy but it certainly was far easier than now, subject to landing the right job and making the right decisions with property and investments.
    Mr Straw described whiplash as "not so much an injury, more a profitable invention of the human imagination—undiagnosable except by third-rate doctors in the pay of the claims management companies or personal injury lawyers"

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