AIBU for sacking off pension contributions in anticipation of large inheritance?

Speaking from experience of what I am going through now don't rely on inheritance if you have siblings no matter how well you think you know them or how close you are

My dm will was equal between me and dsis we had both had poa not registered with the bank. Found out dsis had been helping herself to dm money tried to broach the subject nicely advised could be see as deprivation of assets she may get in trouble I thought the matter was resolved and all was ok. Dsis has blocked me and my dc excluded us from dm care and family events although we did used to go round to see dm until she stopped inviting us in the house the locks had already been changed by dsis she has convinced dm to remove me as poa activated with the bank done an equity release on dm house when I asked dm if she had changed her will she said she thinks she has and it should go to the person looking after her which obviously is now only dsis as I've been excluded
Dm house has been cleared and now being rented out I had to hear from a neighbour she has moved in with Dsis probably so dsis can get the rental income
Ss passed to the police I reported it to opg who took a year to assign it to an investigator who doesn't seem to have done anything and neither the police or ss will do anything as it's with opg so she will get away with it

Thankfully due to pil going into care we haven't relied on inheritance as know it isn't guaranteed ironically dsis used to tell my dc everything goes to her and when they corrected her shunlike dsis who has an interest only mortgage with no endowment and 2 other mortgages to pay

I work in a care home and it has several married couples living there. That would cost £13k a month. Care homes fees go up by 5% at least every year. Never rely on inheritance as a financial safety net.

^ This. I too am seeing this around me. 80/90 year olds are outliving their children, or the children are dying very shortly after the parents. One colleague retired at 65 to look after her 85 year old mother. Mother got pneumonia, daughter cared for her until mother needed to be admitted to hospital with it. A week later the daughter died of.... pneumonia. This was 5 years ago. Mother is still going strong. Another friend of a friend's dad finally died at 103. 6 months later his 73 year old daughter, who'd cared for him right up to the end, died of the cancer she'd been hiding from him.

Personally, I’m not doing much in the way of saving for retirement. As callous as it sounds, DH is going to get some money from his mum’s passing, eventually. My parents (while not exceptionally wealthy) have about 10 rental properties that they’ll probably split them up between me and my two younger brothers in their will.

I figure if DH dies before me (which is the most likely scenario) I’ll be left with a couple million in assets and should be able to live out the rest of my life on minimal income from whatever job I’ll do when DD becomes school age, savings, sale of assets, life insurance payouts, and interest from investments.

I should be able to pay off the mortgage on the house we currently own, and we have a well and a solar roof, and I’m trying to get it so I can source all my food from my garden, kept animals, and hunting. My car is electric and paid off. That should leave only expenses like car insurance and repairs (though we have a family friend that usually does that for free for us), clothing (which I hardly spend any money on anyway) toiletries, oil for heating, septic changes, and things for my DD/her eventual DC (hopefully!)… Am I missing anything? I plan to keep myself in good condition as long as possible to avoid needing care, and to hire it if needed. I don’t expect DD to stunt her own life to care for me.

DH has an account set up with funds for DD’s higher education, though my education wasn’t paid for by my parents and I’m not inclined to pay for DD’s, so I’m not contributing to that, either.

If I die before him/our relatives, well… I’ll be dead.

Can things go wrong? Sure. I feel like it’s worth the risk to just enjoy my life in the meantime, though, instead of stressing about saving for retirement.

I’d still pay pension contributions.

As you have been discussing inheritance with your parents - are you sure they are making full use of the gifts exemption? The one everyone tends to forget is regular gifts from income. If they are in good health now but have no desire to spend all their money they could be giving more away - but stop that when or if one needs more care.

So while they are focusing on their grandchildren they may still have the ability to contribute small but regular amounts into your pension if they wished to do so.

DH and I inherited nearly £500,000, we are in our 60’s retired, with 1 on State Pension and 2 small private pensions, we’ve already spent £150,000 on just living, no big holidays, small house renovation.

I would never, ever assume that I would get any inheritance at all..... let alone of a specific amount. Anything could happen.
Just pay into your pension, OP, and stop with the greedy assumptions.

True but the average stay is around 2 years and the vast majority of people don’t go into a care or nursing home.

I did it the other way around, I paid lots into a pension, retired really early and then received 2 completely unexpected and therefore unplanned for inheritances.

These days people seem to be increasingly relying on inheritances. Imagine their faces if dear old mum and dad leave it all to charity!

How much of the estate value is in property?

My friend's DF died and left her a £2m house but not enough cash to pay the bills on the estate.

The government lets you pay the IHT in 10 installments but they charge interest on it. I think it's currently about 7%

My friend was in a right mess as she couldn't sell the house. The pool of buyers with £2m to spend is much smaller than your average buyer. She still had to meet the bills - council tax (relief is only for first 6 months after death), insurance, electric, etc. and find the money to pay the IHT installments and the interest on top. In the end she had to keep reducing the sale price until it eventually sold, after 2 years of marketing, for £1m.

Don't assume that an expensive property will translate into cash very easily.

I think that would be extremely short sighted. Pensions are an extremely tax efficient way to save for your later years and provide for your spouse and successors, although the IHT efficiency has been stripped away by our glorious labour government.

Contributions receive income tax relief and investment growth is virtually tax free. At the point of taking pension benefits, 25% can be paid tax free and the remaining income can be taken flexibly. Furthermore, it is likely that your employer will contribute significantly.

It wont pay to put all your eggs in this basket. There is a chance that care costs will take a great deal, they might spend lots, or change their mind entirely. In any case, is there any harm in having both?

Yeah my mum did this. Then her mum
died, her dad went increasingly senile and left his millions to a woman in her thirties he met on holiday. Court case to get the money back failed.

so yes, You’re being very very silly. Pay your own way in life.

Given your ages and now having more available to save, I would just look at this as an opportunity to maximise your money. You will get tax back on any contributions you make, so more going into the pot than an isa or savings account. I presume it is a defined contribution pension, so the sum would go to your spouse or decendants if you die. In 5 years you would be able to start accessing it if you need and 25% would be tax free (at current rules).

Then you have done the most with what you have and any inheritance is a bonus on top.

Pensions (SIPPs particularly) are a great way to reduce tax paid and invest without worrying about capital gains. I put a large amount into mine despite having a significant lump sum (not inherited, already paid out). It keeps me under the higher rate income tax threshold, and I like playing around with investments in the wrapper as there's no capital gains, and I'll get out 25% tax-free when I'm older. It just makes sense to make use of the pension allowance while you can.

Hope for the best, but plan for the worst.

Relying on inheritance is akin to relying on winning lotto. Both DH & I were expected to inherit reasonably well, but circumstances have changed in the last few years & through my DP's poor decisions, FIL's remarriage & willing most to his new wife, there'll be very little to inherit. It was also whispered I'd inherit from a childless uncle. His unpleasant wife made sure that wouldn't happen before she passed (along with her DC disinherited). It's all going to charity. I know because I'm his executor.

In our late 40's / early 50's now & really glad we didn't account for inheritance & have built a good pension balance.

My mum died, my dad remarried and left almost everything (hundreds of thousands) to his second wife. Never assume.

What about if you die before DH, and before DPs?
Assume then DH would get nothing with your share of future inheritance passing to your children.
Leaves him pretty exposed with a tiny pension.

as been pointed out there are multiple reasons not to rely on inheritance as a part of future retirement plans.

Well, it's a gamble. Personally I wouldn't do it (and haven't despite being in a similar situation to you) not only because of all the things that could happen between now and the point at which I might inherit, but because I don't want that gamble to be hanging over me. I don't want to be thinking about my possible inheritance when I'm making plans with my parents for their care needs/meeting a new partner post-bereavement/hearing about how they've decided to leave it all to the church. Complete financial independence is very freeing, and also frees you to think about your children when the time comes- perhaps if the money does come to you and you don't need it, you can vary the will so that it goes to your children.

It also sounds like they could skip your generation and leave it all to the GCs, which is often not a bad idea financially.

Assuming you actually inherit that much what will it be worth in real terms in 20 years time? It sounds like a lot, but after potential care home fees it could be much much less and depending where it is invested inflation could take a big chunk in real terms. It's really nice as a potential cushion for your senior years, but I wouldn't be absolutely relying on it.

So no I won’t be asking them for holidays or to pay into my pension however nice that would be.

Ah, ok. Just wondered, given you seemed to have talked to them about inheritance, if they were the sort who would be happy to do that as a more tax-efficient way of transferring spare money to you (I pay a modest amount per month into a pension for my student kid).

This. Don't factor inheritance into your life plan. If / when it comes then it's a bonus (sort of, depending how you look at it). You never really know what's going to happen, so you shouldn't depend on something that's not in your control if at all possible.