Looking for help with advice for my parents

Smudgeismydog

I think it might be sensible to transfer the Stocks & Shares ISA into a Cash ISA. This allows them to retain the tax efficient ISA wrapper, but means the value isn’t exposed to stock market fluctuations, so one less thing to worry about. They could then place some of the Cash ISA into a fixed rate Cash ISA for a higher return (rather than one that offers immediate access), but this does mean tying it up for e.g 1 year. Do they both have ISAs, or are they in your Dad’s name?

With regard to the L&G pension, from your post it feels as if a guaranteed income might be what your Dad is looking for. This will offer some security and peace of mind. If he decides to take an annuity, he can build in spouse’s provision, so in the event of his death, it can continue for your mum, but please note by adding this feature to the annuity will reduce the starting income level. If he took the tax free cash element, they could add it their Cash ISAs to use it to build their contingency fund, or splash out on a trip to visit you in Canada.

The other thing to think about is who has what income payable in their name. Your Dad has his State pension and income from work in his name, and your mum has the State pension in her name. Who receives the Airbnb income? 

born_again

You mention AirBnB
Is that a separate property. Which will of course increase monthly expenses. Or part of their home, which again will increase insurance costs.

DRS1

So the £12k is the state pension?  Presumably your father is already getting his?  Someone will say your mother should check her forecast to make sure she is getting the maximum allowed.

On the ISA the fees come out of the cash part just because that is in cash.  They relate to the whole ISA.  If you switch it all to a cash ISA you won't see any fees (but people on here will tell you there are hidden costs in cash).  It may be the right time to switch or it may not.  I certainly don't know and anyone who claims to know is probably best avoided.

Cairnpapple

Regarding your dad's DC pension, he might benefit from a call with Pension Wise to talk through his options.  

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

poseidon1

Is the Airbnb property income derived from a separate dwelling from your parents home?  If so up until April 2025, the AirBnB income ( serviced lets) was treated as pensionable earned income, but I am guessing your parents may not have availed themselves of the opportunity to contribute to private pensions from that income source.

Going forward Airbnb has lost that beneficial earned income status and is now treated for tax purposes no differently than any other passive buy to let residential letting.

Given the ever increasing hostile legislative  environment for private landlords, what is the value of the Airbnb property ( assuming of course its not run from their own home)? 

 Depending on its value, and any capital gains tax that maybe payable on a potential sale, is there a potential benefit in their selling and reinvesting in more liquid accessible income producing assets?

Marcon

Pipsqueak87 said:

Hello.

I hope I can get some input here on some advice to give my parents.

I left the UK at about 20, and I’ve been gone almost 15 years now, so I’m really not clued up on how pensions etc work over there as it never concerned me. 

Both of their children now live in far away countries and have their own children, so my parents need flight money to visit multiple times per year, which increases their yearly spend quite a lot. I want them to make good decisions with their money, but it almost seems too late to do anything meaningful to increase their financial position. They are looking to me for advice on how to best make use of the money, and what options to choose in order to maximise it. 

Any advice hugely appreciated and welcomed! 

Wouldn't the best idea be to suggest to your parents that they take some proper (paid for) financial advice from a professional? It makes little sense for them to rely on someone who, realistically, is in no position to do more than relay comments from random strangers on the internet, based on a few paragraphs of information.  

itsthelittlethings

Marcon said:

Pipsqueak87 said:

Hello.

I hope I can get some input here on some advice to give my parents.

I left the UK at about 20, and I’ve been gone almost 15 years now, so I’m really not clued up on how pensions etc work over there as it never concerned me. 

Both of their children now live in far away countries and have their own children, so my parents need flight money to visit multiple times per year, which increases their yearly spend quite a lot. I want them to make good decisions with their money, but it almost seems too late to do anything meaningful to increase their financial position. They are looking to me for advice on how to best make use of the money, and what options to choose in order to maximise it. 

Any advice hugely appreciated and welcomed! 

Wouldn't the best idea be to suggest to your parents that they take some proper (paid for) financial advice from a professional? It makes little sense for them to rely on someone who, realistically, is in no position to do more than relay comments from random strangers on the internet, based on a few paragraphs of information.  

It hardly seems worth paying for financial advice?

Marcon

itsthelittlethings said:

Marcon said:

Pipsqueak87 said:

Hello.

I hope I can get some input here on some advice to give my parents.

I left the UK at about 20, and I’ve been gone almost 15 years now, so I’m really not clued up on how pensions etc work over there as it never concerned me. 

Both of their children now live in far away countries and have their own children, so my parents need flight money to visit multiple times per year, which increases their yearly spend quite a lot. I want them to make good decisions with their money, but it almost seems too late to do anything meaningful to increase their financial position. They are looking to me for advice on how to best make use of the money, and what options to choose in order to maximise it. 

Any advice hugely appreciated and welcomed! 

Wouldn't the best idea be to suggest to your parents that they take some proper (paid for) financial advice from a professional? It makes little sense for them to rely on someone who, realistically, is in no position to do more than relay comments from random strangers on the internet, based on a few paragraphs of information.  

It hardly seems worth paying for financial advice?

Not really something anyone here can call. Not enough info to know.

Pipsqueak87

Smudgeismydog said:

I think it might be sensible to transfer the Stocks & Shares ISA into a Cash ISA. This allows them to retain the tax efficient ISA wrapper, but means the value isn’t exposed to stock market fluctuations, so one less thing to worry about. They could then place some of the Cash ISA into a fixed rate Cash ISA for a higher return (rather than one that offers immediate access), but this does mean tying it up for e.g 1 year. Do they both have ISAs, or are they in your Dad’s name?

With regard to the L&G pension, from your post it feels as if a guaranteed income might be what your Dad is looking for. This will offer some security and peace of mind. If he decides to take an annuity, he can build in spouse’s provision, so in the event of his death, it can continue for your mum, but please note by adding this feature to the annuity will reduce the starting income level. If he took the tax free cash element, they could add it their Cash ISAs to use it to build their contingency fund, or splash out on a trip to visit you in Canada.

The other thing to think about is who has what income payable in their name. Your Dad has his State pension and income from work in his name, and your mum has the State pension in her name. Who receives the Airbnb income? 

Thanks so much for this detailed response! I really appreciate it. I think right now, because they’re both still working, the air bnb’s income is split between them. And I did mention to them that when mum retires it should perhaps all go to her as an income, due to dad still earning. I think they were under the impression that they would still be splitting it as it wouldn’t push dad into a higher tax bracket, and so it wouldn’t make a difference. Although I have not looked into that at all! Something I will do! 

Again, your time in writing that is appreciated and confirmed a lot of the opinions I had! 

Pipsqueak87

born_again said:

You mention AirBnB
Is that a separate property. Which will of course increase monthly expenses. Or part of their home, which again will increase insurance costs.

Yes it’s a little annexe attached to their home, so it might be the reason their insurance looks high! It’s up for renewal next month so I’ve strongly suggest they get a few quotes before they just renew.