Using inheritance to boost retirement - please sense check my plan

Yorkie1

Look at BBC Sounds for the Martin Lewis money show podcast. One of the relatively recent episodes covered student finance.

MallyGirl

LeopardPassenger said:

kimwp said:

I think you should be provisioning to help your kids at university, particularly over spending £115k on holidays.

I wouldn't put anything that you are hoping to have available in the next 5-10 years into stocks and shares.

Thanks, yeah you're probably right. I think because we've all had a tough few years caring for an elderly relative, and the kids have never had an international holiday, we thought it would be nice to use some of the inheritance for a few dream trips together before they leave home. But this is more sensible. Probably a stupid question, but how much would you recommend? I'll also do some research into living expenses, even if they end up getting student loans for the fees.

Based on the salaries you hope to have next year your kids would probably only get the minimum maintenance loan which puts you on the hook for topping up maybe £5k per year per child. That assumes that they don't choose to study in London or live at home during their studies. We ended up paying for the accommodation and they lived off the maintenance loan (food, bills, travel, entertainment, uni kit, books, etc).

Albermarle

MallyGirl said: hi

LeopardPassenger said:

kimwp said:

I think you should be provisioning to help your kids at university, particularly over spending £115k on holidays.

I wouldn't put anything that you are hoping to have available in the next 5-10 years into stocks and shares.

Thanks, yeah you're probably right. I think because we've all had a tough few years caring for an elderly relative, and the kids have never had an international holiday, we thought it would be nice to use some of the inheritance for a few dream trips together before they leave home. But this is more sensible. Probably a stupid question, but how much would you recommend? I'll also do some research into living expenses, even if they end up getting student loans for the fees.

Based on the salaries you hope to have next year your kids would probably only get the minimum maintenance loan which puts you on the hook for topping up maybe £5k per year per child. That assumes that they don't choose to study in London or live at home during their studies. We ended up paying for the accommodation and they lived off the maintenance loan (food, bills, travel, entertainment, uni kit, books, etc).

We did exactly the same. Paid for the accommodation for three years for our daughter. Midlands location 10 years ago
IIRC first year in hall of residence was £6k; 2nd year in typical shared student house £4k
3rd year in nicer flat £6k
Presumably more now and more if in South East/London.

Albermarle

LeopardPassenger said:

Albermarle said:

A few first reactions:
Do you have a workplace pension? If so I would consider adding to this as well as your husbands pension,
Although you are financially overall in a good position, your pension pots are painfully small. I appreciate you are not too concerned about building up  very large retirement funds, but pensions are a tax efficient way to save/invest for later.
Topping both up will also mean you get the money invested earlier.


We are not planning to be able to support them financially through university 
That is relatively unusual for a family with the resources to help. Even if they take the full student loans available, there is a significant shortfall of day to day living/accommodation costs.

£115K into savings, specifically for family travel over the next 6-8 years, ticking off our big bucket list trips (Moneybox 95 day notice account 4.08% interest)
You might consider having some of this in longer term fixed rates, as interest rates are on a downward path.

£150K invested to fund the house move (I'm looking at Vanguard accounts and would be grateful of any input)
As you are probably looking at a house move in a 5 to 10 year period, then  medium risk type investments would probably be best. Some would say you should keep it in cash, but you already have a lot of cash.

Sorry, yes, I do have a workplace pension that I'll continue to pay into, and which isn't factored into this plan. My husband also routinely puts £100 a month into his SSIP and will continue to do so. Sounds like we're best off checking his income towards the end of the financial year and then working out how much more we can add.

Thank you for the tip re: longer fixed term rates. It seems to be (on a minimal amount of research) that the best rates are on solo, rather than joint accounts - is this the case? 

Medium risk is what I was thinking - if the markets are down when we're planning to move then we could happily delay moving for another few years.

On the first point, it is usually advised to look at the family finances in the round, so including everything, but it is up to you of course.

I have only ever opened a joint current account, so have never looked into joint savings accounts.
Also most of our savings are in ISA's which you can not hold jointly.
Speaking of ISA's you should max these out each year as you said. Interest gained in a Cash ISA is non taxable, as are returns in a S&S ISA. For the latter an added benefit is you need to keep no records of gains or dividends ( same in a pension) Whereas running a General Investment account brings some admin with it.

Smudgeismydog

Albermarle said:

MallyGirl said: hi

LeopardPassenger said:

kimwp said:

I think you should be provisioning to help your kids at university, particularly over spending £115k on holidays.

I wouldn't put anything that you are hoping to have available in the next 5-10 years into stocks and shares.

Thanks, yeah you're probably right. I think because we've all had a tough few years caring for an elderly relative, and the kids have never had an international holiday, we thought it would be nice to use some of the inheritance for a few dream trips together before they leave home. But this is more sensible. Probably a stupid question, but how much would you recommend? I'll also do some research into living expenses, even if they end up getting student loans for the fees.

Based on the salaries you hope to have next year your kids would probably only get the minimum maintenance loan which puts you on the hook for topping up maybe £5k per year per child. That assumes that they don't choose to study in London or live at home during their studies. We ended up paying for the accommodation and they lived off the maintenance loan (food, bills, travel, entertainment, uni kit, books, etc).

We did exactly the same. Paid for the accommodation for three years for our daughter. Midlands location 10 years ago
IIRC first year in hall of residence was £6k; 2nd year in typical shared student house £4k
3rd year in nicer flat £6k
Presumably more now and more if in South East/London.

My daughter started her first year in September, and I’m covering her accommodation. She is in halls this year at @ £6,800, she’s signed up for her house next year @ £179 per week (52 week contract, exclusive of bills). Like @Mall@MallyGirl and @Albermarle, I will fund her accommodation for the duration of her course. She is studying in the South West.

My daughter is funding her tuition, food, travels, entertainment etc.

jimi_man

We did the same with our two when they went to uni, as did most of our friends.

However OP there is no reason why you can't do both some long haul holidays as a family AND fund their tuition. £115k is quite a large amount for holidays - you can do some decent long haul holidays for a very reasonable price. With long haul holidays there isn't quite the price hike for school holiday travel and places like Asia for example are considerably cheaper to stay and eat than virtually anywhere in Europe and definitely the UK. It obviously depends where you want to go. 

It's up to you how much to put towards your child's uni experience, but for the two of them I'd probably think setting aside £40k in total (£20k each) would get you most of the way there. That still leaves £75k for holidays and other things. 

ader42

Put as much in your SIPPS (to get tax relief) as possible, only put money in the LISA after the SIPP allowance has been utilised as you can access SIPPs before LISAs given you won’t be buying your first house with it.

Make sure your total pension provisions are about equal to maximise tax efficiency when drawing them. 

DT2001

It looks as if you will pay tax on some of the interest, particularly in the short term, so I would look at how much you can put into SIPPs to see if you can reduce the tax burden.
Utilise cash ISAs for both of you and consider putting some into your children’s names if you decide to assist with their university costs. We put money aside over the years running up to uni (our eldest went into an apprenticeship so got a boost for getting on the property market). Another thing we did was to pay the children from 14 as OH was self employed. Low amounts for a few hours a week (agreed by local authority) and put through HMRC software. Eased the burden come uni for numbers 2, 3 and 4!

At a tangent I would discuss your plans with your children as soon as you think you can as it helps teach them about finances. Two of mine now regularly discuss the merits of their pension schemes.

Generally I think your plans are a good combination of doing something for the here and now and planning for the future.

Good luck 

Purplelady65

I think you’ve got enough money available to fund both some fabulous holidays abroad and support your kids through university. I appreciate if you’ve all had a tough few years and not had any family holidays abroad while you would want to do so now. They are also at an age where they would probably get a lot out of any big trips. We took ours on quite a few USA, Canada, Thailand, Sri Lanka and lots of European trips as well as UK and have lots of great memories. Re financial support for kids at uni when ours went to uni we paid their rent and household bills eg gas, water, broadband etc as well as bus pass and they used the maintenance loan to live on eg food, socialising etc. You could get an idea of likely costs by looking at the cost of student halls or rooms in student houses. The costs can vary as some cities are cheaper than others for students. 

Albermarle

Purplelady65 said:

I think you’ve got enough money available to fund both some fabulous holidays abroad and support your kids through university. I appreciate if you’ve all had a tough few years and not had any family holidays abroad while you would want to do so now. They are also at an age where they would probably get a lot out of any big trips. We took ours on quite a few USA, Canada, Thailand, Sri Lanka and lots of European trips as well as UK and have lots of great memories. Re financial support for kids at uni when ours went to uni we paid their rent and household bills eg gas, water, broadband etc as well as bus pass and they used the maintenance loan to live on eg food, socialising etc. You could get an idea of likely costs by looking at the cost of student halls or rooms in student houses. The costs can vary as some cities are cheaper than others for students. 

Although big trips abroad will be an experience for them, so is going to Uni. So as you say it would be best to fund both if possible.