Would you retire really early and burn down most of your DC pension assets?

cfw1994

Ibrahim5 said:

I gave mine money. Problem is now they won't work. No need. There must be an optimum time to give them money.

Maybe you have them too much 😳
Ours will be (is) more help with home deposits, cars if needed, kick start to ISA/pension/LISA etc

LV_426

cfw1994 said:

Ibrahim5 said:

I gave mine money. Problem is now they won't work. No need. There must be an optimum time to give them money.

Maybe you have them too much 😳
Ours will be (is) more help with home deposits, cars if needed, kick start to ISA/pension/LISA etc

Yup, that's the thing I wanted to avoid. But the cat's out of the bag now so they know the score.
As you say, do not give them loads, just lump sums for a specific purpose, and house deposit is absolutely ideal. I think that's fair enough, as house prices are ridiculous, and I got a once in a lifetime break from buying just after the house market crash in the 90's. I'm happy to pass on my good fortune to the kids.

pensionpawn

Bravepants said:

ajfielden said:

Diplodicus said:

I suppose the other argument against ajfielden's proposition would be the beneficial investment advantages of a pension.

Many people of my age are intent on increasing rather than "burning down" their wealth, and circumstances could hardly be more favourable. So a pension may well be the best vehicle for building a fortune in a tax-friendly environment.  

Yes that is the flip side, continued growth, but not for myself. It would be for the benefit of my kids. The reason I wouldn't want to burn everything is to help them buy their own homes, or at least pay a substantial deposit.

There is an argument that you should give your money to your children BEFORE you die. Why make them wait for their "inheritance" for decades if they are struggling now for example?

Check out Bill Perkins' book "Die With Zero".

Of course the other benefit is that once you HAVE given money to your kids, the rest of it is YOURS to do with as you please.

That's exactly what we're planning to do (have done), however as commented below there's a balance to be struck. With money and the (adult) kids I draw inspiration from Nanny McPhee! We'll give it to you when you need it however not when you want it. Progressing on to "give a (wo)man a fish and you'll feed him / her for a day (and you'll have to do the same again tomorrow), teach a (wo)man how to fish...."! So after the eldest two bought brand new cars themselves (with a small inheritance from grandparents as a deposit) to get to and from work (they needed cars) and paying the monthly payments, I said I would pay off their final PCP payment once they've moved into their first owned house. They did and so did I (to help with the mortgage payments). They're doing the majority of the fiscal work and BoM&D give a leg up occasionally. However where we do not throw money at them is "I want (need?) a new 4k HDR tv....." for example. They all have their own pensions set up however the next step (which is proving hard work) is to get them confident in SAS ISA's. They're reluctant to investigate as they know that they can lose money. I even dropped £100 into each of their SAS ISA's to get them started, no risk to them. Nothing. Oh well, still time.... On the flip side my father in law is sitting on ~£400k bungalow (that he rents out) plus his extensive share portfolio and at 85 can't even give his daughter  / grand kids a Christmas / birthday present on the basis that it's all coming their way one day.... I'd rather enjoy seeing what my money can do to help others, especially family that you get on with, whilst I'm alive. Each to their own....

SMcGill

An interest-free loan can make just a big a difference as a gift, especially if it’s a house deposit. Costs you a lot less too 

MallyGirl

SMcGill said:

An interest-free loan can make just a big a difference as a gift, especially if it’s a house deposit. Costs you a lot less too 

House deposits can't be from a loan though - need to be an outright gift.

LV_426

MallyGirl said:

SMcGill said:

An interest-free loan can make just a big a difference as a gift, especially if it’s a house deposit. Costs you a lot less too 

House deposits can't be from a loan though - need to be an outright gift.

What are the tax rules on gifting money to your kids? I've been reading there's a tax free limit of £3000/year.
If so, I'll probably drip feed chunks of cash which they can put into an ISA.

pensionpawn

ajfielden said:

MallyGirl said:

SMcGill said:

An interest-free loan can make just a big a difference as a gift, especially if it’s a house deposit. Costs you a lot less too 

House deposits can't be from a loan though - need to be an outright gift.

What are the tax rules on gifting money to your kids? I've been reading there's a tax free limit of £3000/year.
If so, I'll probably drip feed chunks of cash which they can put into an ISA.

No limit that I'm aware of. Some (including my brother who I still don't know if I've convinced...) confuse amount limits on gifting in the context of tax, and time limits with inheritance and just giving money to family. However that's a different thread....

MallyGirl

ajfielden said:

MallyGirl said:

SMcGill said:

An interest-free loan can make just a big a difference as a gift, especially if it’s a house deposit. Costs you a lot less too 

House deposits can't be from a loan though - need to be an outright gift.

What are the tax rules on gifting money to your kids? I've been reading there's a tax free limit of £3000/year.
If so, I'll probably drip feed chunks of cash which they can put into an ISA.

No tax rule but if you die within 7 years of the gift there might be inheritance tax issues if it was more than £3k a year

Terron

The ONS has lots of interesting graphs. This version makes it clear that pensioners today have about twice the income of pensions in the 70s. The values are in 2020 pounds.

SMcGill

House deposits can't be from a loan though - need to be an outright gift.

I meant an informal loan I ’gave’ my daughter £130k on the understanding she would return it to me when she sold her flat. I didn’t charge interest or ask for a share of equity, so really it only cost me the interest I otherwise would’ve made. A small cost to me but a huge difference to her, she sold it for £135k more than paid for it!