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

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If you knew you would be getting a large (c.£1m) inheritance, would you bother paying into a pension at all or prioritising retirement savings if you are on a lowish income?

Dh & I are 52, both self employed ticking along nicely but far from flush and didn’t start paying into a pension until our 40’s & even then minimal amount as that’s all we could afford.
Our kids are older: one at uni one working/training so we’ve both taken on more work and finally in a position to save so naturally thinking about increasing our pension contributions.

Parents are 80 & 81 in pretty good health and I have a sibling who would be joint beneficiary. Inheritance could be 15/20 years off if parents live as long as their parents did and I’ve accounted for IHT and potential care home fees on the £1m estimate. No inheritance on DH’s side.

AIBU : make your own retirement provisions don’t rely on inheritance or
YANBU there’s a decent inheritance coming your way so no need to prioritise your pension

Hard to answer without knowing what your current pension pots are...

This. OP I don't think anyone should rely on inheritance

I'm kind of surprised that if the estate is worth that much that they themselves aren't doing some forward planning on the estate management and helping you now?

If it's not in your bank account, it's not guaranteed, no matter how promised. If it comes it's a bonus. Until it does, live like it won't.

Keep paying the pension contributions. Apart from the fact that wills can be changed (and as an ex-IFA I have seen that happen many times), why give up the tax relief which is simply cash given to you by the Govt.?

Don't ever rely on a future inheritance.

My mother made a will leaving everything 50/50 between me and my sister.
Then she changed it because "I brought shame on her by getting divorced.
Sister still got half, I got 1/8.

Dementia and second marriage on the death of the first parent could mean you receive nothing.

Surely at around £4 million there is a watertight trust to at least protect half?

Current pension pots are c.£30k and we’re putting in about £1,500pa so even if we keep going at this rate until 67 won’t be massive by any stretch. parents have (very) generously gifted their 6 children significant sums and continue to do so each year on the advice of their FA so all with have large deposits for a property in the SE (or could buy outright elsewhere) but no, we don’t get money from them.

Someone raises a very good point about payment of IHT, which is actually something we’ve not discussed or considered before. We know a sizable chunk of their estate will go on inheritance tax but Perhaps we should be having a conversation about how that will be paid.

We are encouraging them to spend freely, but the older they get the less they need or want to!

I'd sack it off too Op, life's too short

Are you 100% sure it’s coming to you? And not straight to your children? I’d still save, assuming you could sell and downsize if it all went tits up.

It’s a bloody shame they didn’t think to start pushing it down the family sooner, I never understand that.

@rivalsbingeyes entire estate (bar some smaller items/bequeaths) to sibling and I. My parents have recently downsized so have had to sort their finances and discussing their wills & signing POA etc was all part of that.

Yes. Care costs for two would be eaten up within a few years.

In that case I’d relax and enjoy your time with your folks and maybe reduce the savings and hours of work.

it’s still only about 12.5% of people over 85 that even use care homes it’s not the given for every older person.

What a lovely position to be in for your future and your family’s futures.

Always think it’s weird and sad when people anticipate their inheritance. Live your life, make financial decisions based on what you bring in not what you might or might not get years down the line. One parent might die and the other marry again, they might get divorced… any number of things could happen.

My dear friend was like you but by the time her mother died, her brother who was the executor either got greedy or went slightly mad and she never saw any of ut

Whilst I agree anything could happen and I think the number of responses on here saying don’t rely on it has highlighted that. However, I disagree that’s it weird and sad to anticipate an inheritance when we have recently been provided with this exact information by our parents. The estate is considerably larger than I realised & we are on lower incomes so will feel the extra money going into pension vs savings/spending now. I think it’s naive to say no one in our position would at least not to think about it and wonder if they are doing the right thing.

My mum died at 55 and quite quickly. As a result they didn’t have time to set up trust they had planned to manage inheritance. My DF then remarried and my stepmother walked off with most of our inheritance. The last we heard from her was on the day of DFs funeral 20yrs ago. She also had my DF’s generous pension.

So I would not be relying on inheritance.
Despite previous generations reaching there 80s and 90s, both my parents died relatively young. We have just lost my DSis in her mid 50s and DH and I have also suffered potentially life shortening illness recently. So there are no givens in life. Planning your financial future is difficult but I would definitely not rely on inheritance for future security in retirement. I would always secure my own future and see inheritance as a bonus.

My DSis had built up a decent pension and had a large savings pot. Unfortunately she didn’t benefit from any of it. DH and I were forced into early retirement but with healthy pensions and decent savings. We have used a significant portion to reduce future living costs and live comfortably. But we never overstretched ourselves.

I was under the illusion that I would live a long healthy life but I’m a perennial optimist.

The problem with relying on inheritances is you are not in control of your retirement. If your parents live another 20 years you will be 72 and not in a position to retire with no pension provision.

YABU. Your £500k share is £250k split between you and DH, and there won’t be anything like that left after your DPs live in to their 90s and require care.

Keep paying in to your pensions - it’s free govt money in tax relief. You’d be mad to stop paying in.

Do you mean they give the 6 grandchildren money?

I think you should do a bit more than the minimum. There's plenty of stories of parents changing their inheritance plans because of new spouses and senility and the children left furious about it.

My parents have mentioned inheritance but I just nod and don't factor it at all into my plans. If it happens, it's a bonus.

I think I’d be too cautious to not keep paying into the pensions.

£1million sounds nice, but it’s not really that much when compared to good pension pots.

I was really lucky in that my parents died without spending a penny on their care, so their estate was worth a lot. But they gifted all of their grandchildren a lump sum.

I have friends with parents in care homes and it’s eating into the money. One friend whose dad has dementia has already totted up 150k in fees in just over a year. He’s so well looked after, she jokes he’ll outlive her.

@Hollyhobbithey have set up trusts for the grandchildren and have paid a number of large sums over the years plus give smaller cash gifts totalling the annual limit.

Very tempting but I wouldn't... they could be scammed and the money would be gone overnight.

From what you have posted I would have 2 concerns.

Firstly it’s not guaranteed. Care fees aside (that you have accounted for) doesn’t mean your parents will neither spend the money or change their will.

Knowing them as you do, you may feel either is an unlikely scenario but you would not be the first person caught out by parents reassessing their bequests.

This can be especially true after one spouse has died and any discussion about finances is no longer balanced by the other, or deliberately de-railed by new companions.

The other issue is longevity. Not in respect of care fees but when you would get access to the money for your retirement.

If they are in good health at 80 and you are in your early 50’s you may not see a penny until your late 60’s or even 70’s.

If your family are open about finances and money can be liquidated (and they want to help you and your sibling) you’d be better off having honest conversations with them and a financial advisor about them passing some money down now.

Given the size of their estate as long as they keep enough for care fees and maintaining the lifestyle they desire, it won’t attract deprevation of assets and may avoid inheritance tax.

Also for the record I don’t think it’s inappropriate to discuss this with family or in poor taste.

Far too many families don’t have these conversations to their detriment.

As long as your parents are making well informed choices, are not being pressured or being financially compromised, then it makes sense for them to start passing assets down the family chain whilst they are still living.