How much do you save for your DC?

[Chocolattcoffeecup]

How much are you saving for your DC and how are you saving it?

Absolutely this.

I am Gen X. My boomer parents were enlightened enough to see very early on that they fell into amazing luck with the ability to amass what is by today's standards mind-boggling wealth from very ordinary circumstances with the bare minimum of input in matters such as education. They instilled in me the idea that what they left me was the best chance of securing comfortable futures not only for me, but for my descendants too.

I am happy to carry the baton. I am fortunate in that I had a fairly lucrative career until it was sawn off by a change in government policy but ultimately it cannot be right that my boomer father, who secured no academic qualifications at all, earned more from his pension as a park ranger in Africa than one of his own children with a Masters in the UK ever did from a salary. And I am working on the assumption that with the changing dependency burden, the disappearance of secure employment, rise of AI etc etc etc my own children will not have even the opportunities I had.

Seriously, any current parent who thinks their own children will automatically make it is fucking self-deluded. We're not pissing our wealth up the wall, not wearing it on nights out, not parking it on the drive. We're doing our best to share one the incredible luck of one tiny cohort to give our family the best possible chances in an extremely grim near-future.

I’m still not sure about a SIPP for them as they can’t access it til they’re 57 and they can always start their own pension when they work (hopefully with contributions from employers)

chat gpt tells me this:

Pros
1) Extraordinary compounding period. A pension started at birth could have 50–60+ years of growth.
2) Tax relief immediately. Every £80 contributed becomes £100 in the pension.
3) Potentially huge retirement fund from relatively small contributions.
4) Can be a useful inheritance-planning tool for grandparents.

Cons
1) No access for decades. If your child later needs money for university, a house deposit, or starting a business, it cannot be touched.
2) Pension rules may change significantly over such a long timescale.
3) Most young adults would arguably benefit more from having capital available in their 20s and 30s than additional pension wealth in their 60s.

For most families, a balanced approach works best:

1. Build your own pension first.
2. Use a Junior ISA to give the child flexibility in early adulthood.
3. If you can afford additional long-term savings, consider a Junior SIPP as a supplementary gift for their future retirement.

I save £60 per month each for my 2, split equally between s&s ISA and a SIPP. I increase the amounts by £5 per month every year.

I am a very old parent to very young children so should my own savings be required for care needs, theirs will remain untouched and a be decent chuck of money to help them along the way during adulthood.

@InveterateWineDrinkeragreed. Husband and I were thrown to the wolves by parents with this attitude. Spaffed everything, not even provision for their own old age. No help whatsoever. Financial or otherwise. Both living outside the home by 17 and paying our own way (we both aren't yet 40 so not an age ago)! It's been unbelievably hard, we've made a good fist of it but have the battle scars. Adversity we could have done without and don't intent to pass on. It's about doing what you can to give your own a good start. I am happy to make sacrifices for that.

i have 2 children, aged 7 & 5. We save for them through a Sipp, junior stocks and shares isa and our own stocks and shares Isa. We don’t bother with cash savings but I can see the point of opening one at some point to teach them about handling pocket money and how to save - as well as teach them how to invest!

We enjoy our money, holidays, nice house but we also see how much house prices are shooting up and it's getting harder and harder for young people to buy a house. We can help with that so we are, it's not mollycoddling.

I’m sure the vast majority of children whose parents save for them will also have accounts of their own for pocket money and birthday / Christmas money etc. But this is about the longer term picture. A lot of parents would like to help their grown up children being able to put down a deposit on their first home or fund their first car / driving lessons, or contribute towards their wedding or other expensive purchases. Rather than wait for the child to grow up and then find they can’t afford a lump sum contribution, they save little and often while the child is young and benefit from compound interest and share price rises over a longer time period.

Fwiw my parents gave me absolutely no money after I left home for uni at 18. I got the max loan and paid for everything else myself through part time jobs. They contributed nothing for my wedding, my house deposit, and have never given my children any money. I’ve done really well in life and have a very highly paid job, so I don’t think anyone should feel bad that they aren’t doing enough or that they should be doing more.

However, I am saving money for my kids’ university education as costs have increased so much there. I save £200 per child per month into a s&s JISA and it’s projected to be worth £80-£100k when they turn 18. If we downsize we will also likely give them some money towards a house deposit, but we aren’t saving separately for this.

Wow! It really is another world with the Seriously Rich!

I have a teenager and I’m living on a tiny works pension with savings of £30k to last me until I die.
The idea of being able to save any money for my kid is completely hysterical. 🤯

We are not seriously rich, most on here are not, some may be.

What do you mean by a “tiny works pension”? This is a term I read often on here, and the concept of “tiny” is actually my idea of “huge”.

@ParentsTrapped - I agree! Same situation, grew up poor, parents were and still are poor - zero assets, surviving of state pension and help from their kids. They were in no position to give us anything (assets / money) for our futures. We did well despite no help, but life is much harder now as you pointed out so if I can put something aside it makes sense to. I’m sure my child will be fine without but it’s natural to want to help them if you can.

We have saved circ of £6k split between premium bonds and stocks and shares trust fund. I’ve just increased the monthly amount to £50 trust fund £100 PBs. I think our children are going to need all the help they can get. We helped our eldest buy their first house with a partner and hope to do the same for our youngest. University and the cost of buying a property is ridiculously expensive. This is our main focus for savings and will top up with our own savings if need be. It is a massive worry. We have only ever saved small amounts from birth which have added up over time and will increase the amount when able to.

£75 a month into Junior Isa (recent increased from £50). My eldest had about £24k when she turned 18. Mainly intended to help with extras and uni costs. Youngest should have similar.

Would ideally like to give more but budget is too tight.

You save for your daughter’s pension?? Have I misunderstood? Don’t you want her to use the money in her youth for development rather than when most her life is behind her?

We're on a combined income of ~£60k net which puts us in the 69th centile- above average but definitely not "seriously rich".

The answer to this question will vary hugely depending on family income, number of dependents etc. I'm astounded by the savings mentioned on this thread and now feel guilty I haven't been saving enough! However, I don't think you necessarily need to have a pot of money set aside specifically for a child. That seems too restrictive. What if a family member needed private health treatment, but a significant sum of money is sitting in a child's account and can't be used? Just try and save for any future need when and however much you can afford. Then you will have money available any life event, whether it's your child’s university fees or something else.

Compound interest. The earlier you start the more powerful it is. It's about maximum returns. So yeh, my child can have 18k at 18 or they can have more than 10x this if they leave it until retirement. Thus negating the need for them to save so heavily themselves and they can use their own funds for their more immediate needs.

You'll find most people do a bit of both. Or have other plans for supporting with finances at the more youthful stages.

I mean as long as I always have a spare room....they can live with me and save. Which is what I plan for.

You make it sound really irresponsible. When in fact these small sums people are putting into pensions wouldn't compound to much by 18 or whenever in other savings vehicles.

My child talks about going into a very financially unstable career. So actually having a pension half covered will provide them with security to live their youth as they so wish without ruining their future financial stability.

@Hfox the amounts the poster is talking about -£24 a month would compound to about £13k at 18 yrs old. Which probably wouldn't even be a house deposit and isn't even going to cover a year in uni. If that child never touches that again or never contributes, at 68 they have £400k. All the poster will have ever paid in is £5k. It's a no brainer really.

The poster also has a JISA so it sounds as though she very much does have plans to provide money for youthful years support.

@Hfox - I don’t drink tea or coffee, the £24 (uplifted to £30 by the government) per month that I put into her pension is what a lot of people will spend at Costa / Starbucks. But as @gloopyshoopy says, by the time she comes to retire my contributions on their own will be worth FAR more, and she won’t have to pay inheritance tax on it. Of course she will add to it herself when she starts working. She’s facing an uncertain future in terms of what AI is going to do to the labour market. Hopefully my £24 per month for 216 months (£5,184 in total) will give her choices and a bit of security. Low impact for me, potentially high benefit for her.
She also has an JISA, that’s also invested and benefiting from compound interest albeit over a shorter timeframe.

She and her cousins got an inheritance a few years ago, call it £10k. I invested it immediately and hers is worth significantly more today. Her cousins’ parents put the same in a children’s savings account where it has grown by a few pounds a year, barely keeping its value with all this inflation.
Someone unthread mentioned inequality - financial literacy is as much a part of that as the actual sums involved.

We have a Junior SIPP for our son too to get him started and show how even small amounts can add up. The government currently pay into it so it's free money. We also have savings for him for a house deposit too.

Yes the thing is with a SIPP is that a relatively small amount of money can become a lot. If you put in £3000 to a junior ISA, that’ll have grown decently in a few years but not to massive proportions. We have put in £3000 to each child’s SIPP and don’t plan to add any more. It’s unlikely that money would make a huge difference at the age of 18 as it won’t have grown hugely and they will already have the money that’s already in their JISAs. But in 57 years the SIPP money will have amounted to quite a lot.

I also think that knowing you have a small safety net in retirement is mentally a really nice thing as you age, because it will allow you to make decisions about your working pattern, how you help your own kids, with the knowledge that there is some money waiting for you.

I think most people who are paying into a SIPP aren’t doing it instead of giving their children money earlier in life. They’re just investing a relatively small amount now that wouldn’t be very impactful at the age of 18 to let compounding (and the free money from
the government) do it’s magic, and have other savings or investment vehicles for their children. A SIPP is what you do when you’ve already got decent financial arrangements in place otherwise.

Yes, agree with this. We haven’t done SIPPs for our kids because we are prioritising other things but I will put a small amount in at some stage.

I saved a lot into my pension early in my career and thanks to the power of compounding I’m at a point now in my 30s where I don’t need to put anymore in at all, so can divert my savings to other things and have the freedom to step back at work if I choose. My pension pot will cost me a lot less than someone who saved smaller amounts over a longer period or started later. I want my kids to learn this lesson!

On a couple of occasions when I've talked with other parents about saving for DCs, they look at me as if I've got two heads when I mention SIPPs.

I really have found my tribe here!

I don’t understand the point of a SIPP. Why would anyone save for late 50’s?

DS has an isa (previously a jisa) which will give him a very decent house deposit. He is 18 years old. He also owns half of our house (when I die) so not sure if he’s even allowed a SIPP!

is the SIPP separate from an isa? I mean can I save £3k in a SIPP as well as £20k in an isa? Thanks.