Did you retire early before kids went to Uni? How expensive was it?

Lostweekend

Long time lurker, first ever post,  Fed up/stressed with the corporate world and would love to retire but paralysed by one more year syndrome and worry about children as they get older, most prospective retirees seem to have empty nests. I have read lots of previous posts and looked at the flowcharts etc.  How expensive do the kids get?

Background

I'm 56, wife 54 and 3 kids, twins of 16 still at school and third of 12.  All want to go to Uni.  I am putting together a retirement plan involving SIPPS, BTL and wife's DB income. Will post it on here for a critique one day soon as we are newish to investing (been an interesting first 15 months for us).

Current position

We currently budget for approx £40k a year. If I can retire at the end of this year we should be able to take £40k-£45k using £30k fixed income (DB and BTL) and the remainder at 3% SWR.  Although current income is higher we have been accumulating to make up for decades of misunderstanding finance - all previously in cash ISAs (I know, I know), now in global trackers etc.

The real anxiety is over increased costs when kids go to Uni etc. We have read all about the student loans system and treating it as a graduate tax etc. but nevertheless we would want to help them. We have also not yet had to pay for driving lessons etc. We plan to set aside some capital for the Uni support, probably from wife's lump sum.

Questions

How expensive do post-16 kids get? We don't indulge them but do want to help. I appreciate retiring under 60 is a luxury and I don't want to indulge myself if this means the family are left insecure. Unfortunately part-time isn't an option in my particular area. Of course one more year would put us all in a better position but we could keep saying that, and both parents died youngish without enjoying a decent retirement.  Any views from those who have retired with kids yet to go to Uni, been there/done that would be appreciated.

Thanks for reading

Marcon

Post-16 kids are the same as kids of any other age: they'll get as expensive as you let them get! It's great they all want to go into higher education, but the 12 year old in particular might well see the merits of an apprenticeship.

You say you've read about student loans, but do you fully understand how they work? If not, try https://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes/ (and even if you do fully understand, that article still makes reassuring reading).

As you say, one more year would put you all in a better position...

Lostweekend

Thank you Marcon. Yes, I have read that link, it is really useful. I was also wondering what its really like for parents. I was lucky enough to get a full grant. Having said that, there was no access to any loans or other cash so when it was gone, it really was gone.

gm0

Budget - 3k-5k / year for subsistence subsidy if they don't qualify for the subsistence loan because you earn too much or didn't take the means test (in which case they get the base amount) or did a year or two back.  System assumes subsidy.  Hard without.  Big difference between taking on some work for extras and experience and having to do it alongside studies to make rent.  Some money will be tied up as rental deposits also along the way.

It's a piece of string ultimately as you can subsidise your kids to make rent+bills, shop at Aldi and have essentials like a cheap smart phone.  If they then work for extra - that's a choice and an education. Or you can be in a different world of new designer gear, upmarket iPhones and expensive food + drink and fairly new cars.  Depending upon where they go to study you will likely find both.

gm0

2nd point.  Where they study makes a huge difference to the costs they face when they live out.   Some cities a room in a grotty student flat with 4-5 others is £65/pw + bills or a shade less.  Other cities it can be 2x 3x or worse.  Local supply and demand.  Birmigham workers houses as HMOs there is excess supply walkable to the university (grotty it is but nothing different to student life 40 years ago).  Bath city centre and suburbs - excess demand.  Prices up.  Slow to get organised students live in Bristol and take the train over each day.

Steve182

We plan to retire when our son (only offspring) is 10.

I've factored in a £30K lump sum, which will either be 3 years uni contributions from us at £10K, plus a bit more from our pension if needed, or in the event he becomes a plumber instead it will be put towards a house. 

atush

Personally, with 3 uni kids if they are doing decent degrees they WILL pay their student loans(unlike much advice here and elsewhere).  i have 3x from 25-30 and if they had student loans they would all be paying them.  So i made a point in making sure they graduated w/o student debt. The repay rates are much higher than they used to be.

Lostweekend

Thanks all so far. Yes location really matters and we are trying to steer away from London at least.  Peer pressure is quite powerful regarding phones etc but they are well drilled on cooking from scratch, value grocery shopping and making good decisions on general spending. Looks like the older two are set on decent paying careers so likelihood is they will have to repay. Youngest is yet to even consider beyond tomorrow - his first day back in year 7 since December.

chiefie

An unexpected issue was acting as a guarantor for student accommodation. Some are majorly picky and in the last year I had to pay a years rental up front for child as I had no uk income. Some of these owners of HMO’s make a mint. 

fred246

Courses are between 3 and 6 years. Assume a 4 year course. If you want to avoid student loans you have to pay £9250 a year plus their living expenses (around £10k). So roughly £20k a year. £80K in four years. £240K with 3 children. If you take loans the repayments are the same however much you borrow. So you may as well borrow the max. If you retire early you will have a low income so they will get the maximum £9K a year to live off. They may need topping up. Max £5K a year. So with 3 children you would need £60K maximum. So mine borrowed the max and I gave them much more than they needed. So they left university with good house deposits which means they can purchase property if they want to and get good interest rates on mortgages. As long as I can afford it I will give them monthly money until I die which hopefully will help cover their student loan repayments.

fred246

chiefie said:

An unexpected issue was acting as a guarantor for student accommodation. Some are majorly picky and in the last year I had to pay a years rental up front for child as I had no uk income. Some of these owners of HMO’s make a mint. 

If you sign up as guarantor they are going to get the money off you whether you pay up front or as monthly instalments.