How much do you save for your DC?

[Chocolattcoffeecup]

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

@KarmenPQZ when I say we, I mean as a society - there’s lots out there about it but people find it too boring and/or complicated.

As a society we are not building the social housing we will need to house all those who have neither bought a house nor saved enough to pay sky high rents for 30+ years of retirement.

For a long time my mum lived off state pension (pension credit) and housing benefit. It was not a luxurious lifestyle (partly as she had to top up the housing benefit with pension in order to pay the rent).

While I have plenty saved for my pension, and have been fortunate enough to buy a house (still got a big mortgage), I know many who will face a relatively bleak retirement living in substandard accommodation in a location they wouldn’t choose.

Moving a little off topic, I wonder if there may be some mileage in the government starting a National Wealth Fund to fund future state pensions - rather than rely of the current day workers to pay the pensions of those already retired. I could envisage a scheme whereby the government add £5K to the fund for every live birth (around 600,000 a year). It's "only" 3B a year. And would create a fund that could be used to invest % in world stocks, a large % in UK stocks and the remainder in UK infrastructure.

By the time their 18, they will each have around £50,000 in the bank and a fully paid-off house worth around £200,000 each.

The reason we can do this is that we received help from our family to purchase a house without a mortgage. We would like to do the same for them.

Of course, I would not transfer the house into their name immediately. They could live there rent-free after they turn 18, or we could sell it and purchase another property wherever they decide to settle. However, they would only receive ownership once they are fully settled ( married, kids, etc) in life or after we are no longer alive.

The same applies to the money. They would not know that it has been set aside for them. If we believe they want to use it for something worthwhile and responsible, we would give it to them.

It is not something they are automatically entitled to.

I was thinking about this earlier @XVGN
But making it more personal, like the Child Trust Funds - so the government puts a one-off £3,600 into a SIPP for every live birth, the equivalent of one year’s maximum contribution. Maybe they also re-start the CTFs with £500 in them. Both are invested in a global tracker fund.

Accompany these with basic info and some online videos about how they work, so people can see the power of compound interest and have a ready made investment pot set up to add to if they want / are able to.

It’s very long term, but on an individual basis it would be quite impactful, both at 18 and at retirement. And it has the potential to ease some of the burden on the state.

A big sovereign wealth fund with all the proceeds from North Sea oil would have been a good thing to do, like the Norwegians did, but we decided tax breaks were better…

We'll have cash for them when the times comes - when they are in a position to buy a property - but we haven't put aside a sum for them.
We haven't benefited from an inheritance and we feel our kids should work hard and save. Both in early 20s, both earning a good salary with no housing costs. Ds is saving £15k a year - I'm sure dd is saving similar. They don't know we will help them, as I have been quite clear in my intentions - they make their own way - good habits and all that.

On the subject of Junior SIPPs, and article in The Times about them. Shame they’ve linked them to the middle class as I think they are actually a really effective way to help equality in retirement.

Germany has recently introduced a government-subsidised early-start pension due to forecasts that there will be only 1.3 taxpayers for every pensioner by 2050….

https://www.thetimes.com/article/1bb02a43-170e-4c92-a627-485da2295402?shareToken=cb02770dbf3d90b24d8591e9a8548ddf&ver=article

Our two have each had £100 per month put in a junior ISA for them since birth however we’ll probably increase the monthly figure when I’m back off maternity leave in January. They’ve also got a couple of thousand each in premium bonds which is where we put any money given to them off family. Hoping that garners some little wins each for them over the years!