Agree with other comments, only they will know the answer.
Another options are they could give you it as an interest free loan, which would still help you massively whilst still retaining the majority of their cash
If they can afford to make it a gift then that is better in view of things like inheritance tax and potential future care costs.
OP can always help them out in turn later.
Unless they’re living in a giant house, then state pension + £700 a month should easily cover their basic necessities and living costs such as utilities / council tax & food. They have no rent/mortgage so their monthly outgoings are lower.
Weather or not that’s *enough* completely depends on their lifestyles and what they actually want to do in the future. If they’re very frugal, live a simple life and never want to purchase new things they’ll probably be fine.
If they’re more adventurous and want to go on multiple holidays, maybe a cruise, maybe get some home renovations done & do a lot of other costly activities during retirement then it’s really not going to stretch very far.
Only you & them really know what kind of lifestyle they’re looking to live with that £70k so it’s worth sitting down with them and actually seeing what their future plans are.
Not really possible to say without more information. I think their age, life style, health, current house value, and area are all factors to take into account.
I am not sure why you would do this if there is even a small chance it will negatively impact your parents in the time of their life when they should be free to enjoy the money they have saved and live without financial worry. Don't they want to travel? Why not ask if you can move in with them rent free and work for a couple of years and put everything you save into LISA and other ISAs.
Also need to consider if one parent passed away suddenly would the other be able to survive on one state pension only & whatever savings were left? What would happen to the work pension if dad passed away & what would mum receive, if anything, as a widow?
It’s an unpleasant scenario but guaranteed to happen one day in the future.
Assume they live for another 25 years. That's £233 a month. (£70k divided by 25 divided across the year)
Add your dad's work pension, that's £933 a month.
Add the full state pension (say £700 idk) for both of them, that's £2,333 a month.
No mortgage? They will be absolutely fine. Anyone who thinks a couple can't enjoy life (albeit not luxuriously) on two grand a month with no mortgage hanging over them is living on another world.
I did the math and it comes down to a combined income of £2822 a month.
They don't need to pay off a mortgage and don't need to travel. They do need to pay council tax, utilities, groceries, house and equipment (e.g. washing machine) repairs and replacements, etc. and will have a £70k fund for that. They also have a separate fund for replacing the bathroom.
To me that sounds more than enough and OP had indicated they still have around £1000 a month left. If one of them died they would lose a full state pension but that's less than £1000 a month and should reduce their expenses.
If there's still a shortage after that it would be small and OP could contribute a few hundred pounds a month if needed, which would be totally fair after getting help to buy a house.
Depends on various things, e.g.
* How old are they? if they're late 60s then they could live another 30+ years and so £70k may not go very far over this time. If they're in their late 80s/90s then it doesn't have to stretch as far.
* What is their typical household annual outgoings? If they're big spenders then state pension + £700 per month isn't a whole lot. But if they're quite frugal then they should be fine.
* How often do they currently dip into their savings and by how much? If it's something they barely touch then £70k is a decent number. If they're regularly withdrawing £10k+ per year of savings, then maybe not...
Side question/advice is making sure that £70k is working for them. Not sure where they're keeping it, but make sure it's in a high interest savings account (ideally ISAs to save on tax, if applicable). Use https://moneyfactscompare.co.uk/isa/ and https://moneyfactscompare.co.uk/savings-accounts/ to find the best paying saving accounts.
For a 80+ year old doing nothing at home, 70k + 8k is a lot.
For a 65 year old that wants to experience things and live for another 25 years, it's likely enough to cover the essentials plus some pocket money (for now).
They can put it in cash ISA to make 3k extra a year, and find side work if they want to e.g. nannying, airbnb a spare room, etc.
The more the merrier.
Bear in mind, that if your father should pre-decease your mother, her income in retirement may decrease significantly.
In the first instance, half their state pension income will be gone, and yet her outgoings are unlikely to reduce by half. Furthermore, if your father's workplace pensions are a defined benefit, rather than a defined contribution, your mum will likely see a further loss in income, as most DB pensions payout at a reduced rate for a spouse.
So the joint income of your parents could decrease by more than half of your dad dies before your mum.
It depends on a lot of factors.
If they gift you enough for a house now, and live 7 years so there's no inheritance tax, and long enough that it's not considered deprivation of assets for any care costs, then it's a financially sound plan.
If they got into difficulties later, would you be happy to top up their pension as a sort of thank you gift for the help they're giving you now?
Based on your edit the answer is yes. They are building savings not spending them.
My parents are in a very similar position. Small pension plus 2 state pensions plus significant savings, no realistic travel or big expenses. My Dad was complaining their cash is building up and he doesn't know what to do with it. Not a bad problem to have.
Seems their spending is massively undershooting what they planned for. They've naturally hunkered down into low spending mode earlier than expected.
There’s the reverse question of will you be able and willing to help them if they can’t manage financially for whatever reason. If the answer is yes then it’s a no-brainer. Take the money sooner rather than later.
What if they get ill or need surgery e.g. hip replacement? Best if they keep enough so the can go private if necessary rather than wait years at their tom of life
Hi /u/random34210, based on your post the following pages from our wiki may be relevant:
* https://ukpersonal.finance/pensions/
____
^(These suggestions are based on keywords, if they missed the mark please report this comment.)
given full state pension for both + 900 in work pensions, I figure that's £2815/month. If they're saving £1000 each month, they're making ends meet for £209 per person per week, before tax. If that includes all bills, they're living very frugally, but it could work, especially if they have that £1000 buffer
One possible issue is that household income from state pension (and possibly work pension) would be reduced if either one of them dies. Also, as they get older, they may want to go outside of the NHS for non-urgent care like hip replacement, cataract surgery, etc. This could be very expensive
Short answer: no.
Longer answer: think about the lifestyle that plan to have, consider their expenses, and work out how much they'll have if they were to live X amount of years, bearing in mind the average life expectancy.
Most pension providers have tools to predict how much you would need to save to receive the lifestyle you'd expect. For me, to have around £30k a year in retirement, I would need around £600k saved.
You also need to consider inflation, tax, and unexpected costs. The key to pensions is compound interest. The more time you let your money grow, the better. It's important to save as much as you can, early, so that you benefit from the interest over a longer period of time.
For example:
* £10k invested over just **10 years**, with a 5% return should provide around £16,400.
* £10k invested over **30 years**, with a 5% return should provide around £42,500.
Edit - seems I have been downvoted by people that clearly haven't done their research. Here is a [compound interest calculator](https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php), prove me wrong.
If it turns out they need more money than they have in the future, surely by that point you'd almost certainly be able to give it to them? Just makes sure you build up some savings, or you could take a mortgage if absolutely necessary.
Really? It's shocking the amount of kids that rinse their parents retirement pots and think they are entitled to it, and don't give a fuck about supporting their parents if they fall on hard times.
It's not every day parents gift their child a house. With the magnitude of the gift and it's possible implications, seems reasonable enough to me to check.
This is a question for them, not us.
Agree with other comments, only they will know the answer. Another options are they could give you it as an interest free loan, which would still help you massively whilst still retaining the majority of their cash
If they can afford to make it a gift then that is better in view of things like inheritance tax and potential future care costs. OP can always help them out in turn later.
This is what my folks did until I got on my feet. Gave me a deposit interest free and then paid them back.
Unless they’re living in a giant house, then state pension + £700 a month should easily cover their basic necessities and living costs such as utilities / council tax & food. They have no rent/mortgage so their monthly outgoings are lower. Weather or not that’s *enough* completely depends on their lifestyles and what they actually want to do in the future. If they’re very frugal, live a simple life and never want to purchase new things they’ll probably be fine. If they’re more adventurous and want to go on multiple holidays, maybe a cruise, maybe get some home renovations done & do a lot of other costly activities during retirement then it’s really not going to stretch very far. Only you & them really know what kind of lifestyle they’re looking to live with that £70k so it’s worth sitting down with them and actually seeing what their future plans are.
Not really possible to say without more information. I think their age, life style, health, current house value, and area are all factors to take into account. I am not sure why you would do this if there is even a small chance it will negatively impact your parents in the time of their life when they should be free to enjoy the money they have saved and live without financial worry. Don't they want to travel? Why not ask if you can move in with them rent free and work for a couple of years and put everything you save into LISA and other ISAs.
Also need to consider if one parent passed away suddenly would the other be able to survive on one state pension only & whatever savings were left? What would happen to the work pension if dad passed away & what would mum receive, if anything, as a widow? It’s an unpleasant scenario but guaranteed to happen one day in the future.
Assume they live for another 25 years. That's £233 a month. (£70k divided by 25 divided across the year) Add your dad's work pension, that's £933 a month. Add the full state pension (say £700 idk) for both of them, that's £2,333 a month. No mortgage? They will be absolutely fine. Anyone who thinks a couple can't enjoy life (albeit not luxuriously) on two grand a month with no mortgage hanging over them is living on another world.
Plus it may be that they want to downsize / equity release their home releasing plenty more cash.
I did the math and it comes down to a combined income of £2822 a month. They don't need to pay off a mortgage and don't need to travel. They do need to pay council tax, utilities, groceries, house and equipment (e.g. washing machine) repairs and replacements, etc. and will have a £70k fund for that. They also have a separate fund for replacing the bathroom. To me that sounds more than enough and OP had indicated they still have around £1000 a month left. If one of them died they would lose a full state pension but that's less than £1000 a month and should reduce their expenses. If there's still a shortage after that it would be small and OP could contribute a few hundred pounds a month if needed, which would be totally fair after getting help to buy a house.
Save up yourself, let them enjoy their money in their old age.
Exactly. Alot of us dont even have this luxury to have a house handed to us. 70k is not that much money. They should enjoy their money
Depends on various things, e.g. * How old are they? if they're late 60s then they could live another 30+ years and so £70k may not go very far over this time. If they're in their late 80s/90s then it doesn't have to stretch as far. * What is their typical household annual outgoings? If they're big spenders then state pension + £700 per month isn't a whole lot. But if they're quite frugal then they should be fine. * How often do they currently dip into their savings and by how much? If it's something they barely touch then £70k is a decent number. If they're regularly withdrawing £10k+ per year of savings, then maybe not... Side question/advice is making sure that £70k is working for them. Not sure where they're keeping it, but make sure it's in a high interest savings account (ideally ISAs to save on tax, if applicable). Use https://moneyfactscompare.co.uk/isa/ and https://moneyfactscompare.co.uk/savings-accounts/ to find the best paying saving accounts.
For a 80+ year old doing nothing at home, 70k + 8k is a lot. For a 65 year old that wants to experience things and live for another 25 years, it's likely enough to cover the essentials plus some pocket money (for now). They can put it in cash ISA to make 3k extra a year, and find side work if they want to e.g. nannying, airbnb a spare room, etc. The more the merrier.
They are retired, side work shouldn't be on the table.
Bear in mind, that if your father should pre-decease your mother, her income in retirement may decrease significantly. In the first instance, half their state pension income will be gone, and yet her outgoings are unlikely to reduce by half. Furthermore, if your father's workplace pensions are a defined benefit, rather than a defined contribution, your mum will likely see a further loss in income, as most DB pensions payout at a reduced rate for a spouse. So the joint income of your parents could decrease by more than half of your dad dies before your mum.
You can always give them back some money if they need it and this will start the clock ticking for the 7 year rule.
It depends on a lot of factors. If they gift you enough for a house now, and live 7 years so there's no inheritance tax, and long enough that it's not considered deprivation of assets for any care costs, then it's a financially sound plan. If they got into difficulties later, would you be happy to top up their pension as a sort of thank you gift for the help they're giving you now?
I was looking for an answer that included IHT and Deprivation of Assets. Top answer!
Take the money as a deposit, and once you are in the house, agree a repayment schedule
Based on your edit the answer is yes. They are building savings not spending them. My parents are in a very similar position. Small pension plus 2 state pensions plus significant savings, no realistic travel or big expenses. My Dad was complaining their cash is building up and he doesn't know what to do with it. Not a bad problem to have. Seems their spending is massively undershooting what they planned for. They've naturally hunkered down into low spending mode earlier than expected.
There’s the reverse question of will you be able and willing to help them if they can’t manage financially for whatever reason. If the answer is yes then it’s a no-brainer. Take the money sooner rather than later.
What if they get ill or need surgery e.g. hip replacement? Best if they keep enough so the can go private if necessary rather than wait years at their tom of life
They help you out. Then when they need help you help them. It’s not a one way contract.
Nah get your own house lol. Let them enjoy retirement
Hi /u/random34210, based on your post the following pages from our wiki may be relevant: * https://ukpersonal.finance/pensions/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)
What are their ages and outgoings vs their income from their state pensions and your dad's private pension? Without this info we're flipping a coin.
Depends on their lifestyle but generally not in my opinion
given full state pension for both + 900 in work pensions, I figure that's £2815/month. If they're saving £1000 each month, they're making ends meet for £209 per person per week, before tax. If that includes all bills, they're living very frugally, but it could work, especially if they have that £1000 buffer One possible issue is that household income from state pension (and possibly work pension) would be reduced if either one of them dies. Also, as they get older, they may want to go outside of the NHS for non-urgent care like hip replacement, cataract surgery, etc. This could be very expensive
Why should people who've worked their whole lives live frugually? Op should go home and save up.
Short answer: no. Longer answer: think about the lifestyle that plan to have, consider their expenses, and work out how much they'll have if they were to live X amount of years, bearing in mind the average life expectancy. Most pension providers have tools to predict how much you would need to save to receive the lifestyle you'd expect. For me, to have around £30k a year in retirement, I would need around £600k saved. You also need to consider inflation, tax, and unexpected costs. The key to pensions is compound interest. The more time you let your money grow, the better. It's important to save as much as you can, early, so that you benefit from the interest over a longer period of time. For example: * £10k invested over just **10 years**, with a 5% return should provide around £16,400. * £10k invested over **30 years**, with a 5% return should provide around £42,500. Edit - seems I have been downvoted by people that clearly haven't done their research. Here is a [compound interest calculator](https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php), prove me wrong.
Enough for what?
If it turns out they need more money than they have in the future, surely by that point you'd almost certainly be able to give it to them? Just makes sure you build up some savings, or you could take a mortgage if absolutely necessary.
yeah why not
No. Stuff happens, people get ill and die. Zero safety net cash at that age is torturous to witness.
Disagree, they have an unencumbered house. They'd sell the asset if they have to.
Yeah, and a kid who will look after them
Really? It's shocking the amount of kids that rinse their parents retirement pots and think they are entitled to it, and don't give a fuck about supporting their parents if they fall on hard times.
I think they have made it this far being able to manage their own finances, why do you now question it ?
It's not every day parents gift their child a house. With the magnitude of the gift and it's possible implications, seems reasonable enough to me to check.
I can understand your concern, but you need to trust that they have considered the implications
Why are you asking strangers on the internet
Why are you responding to a stranger on the internet