If you’re paying for private school how are you doing it?

[thesadmaggot]

We have some options:
1 sell down our investments
2 remortgage/use low interest debt
3 reduce pension contributions and pay out of income

i’m trying to decide on which would be most efficient. option 3 increases our income tax bill quite significantly so I think likely to be the worst.

so I wondered if you’re in this situation what would you do?

Send the children to state schools, if you can’t afford the fees now think what they will be like in 5 years.

A deceased grandparent has left money to my DC so they will be going private for secondary.

However, in your situation probably option 1 depending on how much you have in investments. Definitely not option 3 - you need to invest into your retirement not the opposite.

Unless your investments are significant I would be sending them to state
school in your situation.

Honestly I wouldn’t do it if you can’t afford it out of income. We could pay for a few years out of savings but not intending to do that. The caveat against option 3 would depend on % and long term projection. I would not sacrifice a decent pension pot for school fees.

okay. Sorry everyone but not very useful replies so far….

maybe some context, without further pension contributions will will retire age 65 with at least 80k PA in pensions between us, haven’t included state pensions. We are pension heavy.

we have 100k ish in investments which are accessible any time.

I work part time so I suppose increasing hours is option 4. I didn’t include it because I don’t really fancy that.

mortgage is small.

its not an affordability issue. It’s just a logistical one.

Sounds like you’re very pension heavy and will be paying 40% tax on that when you start taking it so option 3 sounds best.

seems very unbalanced to have 80kpa in pension but yet only 100k in investments

Yes we are pension heavy due to the 60% tax trap. With student loan as well we lose 71% of earned income after 100k

we will be paying 40% tax in retirement that’s a lot less tax than we’ll be paying now to access that money

It doesn't sound to me like you can afford it, but there is limited info.

Thank you, it’s not a question about affordability. I think we can afford it. It’s just how to most efficiently structure our personal finance at this point.

In your shoes I’d just pay for a financial adviser. This is the whole point of them.

If you didn't do anything and paid for it out of monthly income how much short would you be?

We paid ds' out of our wages. He had a bursery 25% for singing in the cathedral choir on a music bursery.

Same with dd2' - but she attends a secondary school in EU after we relocated from UK and the fees are much lower.

We currently pay for one with my husbands quarterly bonus. We have no idea how we will do it when the next one starts in a years time but unlike most of the sensible people on here, we live by the day and always figure it out. In your shoes I would ease off the pension for a few years.
IF you are fortunate enough to have a long and healthy life it sounds like you’ll be fine financially and you’ll be able to look back and feel content you gave your kids the opportunity you feel is best for them.

Im only paying because its a small 6th form. I wouldn't have afforded all though secondary. DD sensory needs were getting in the way of her education. Its not ideal, but i keep telling myself I only have 3 terms left!

We pay out of income. That’s what most people we know do.

In your shoes I would probably reduce pension payments for a while as it sounds like your pension is already in pretty good shape.

Given your updates I would reduce the pension - keep the investments for further eduction and beyond. Is there more you can do to move things around - salary sacrifice cars, medical etc if they are coming out of net pay currently?

If the money was left to the grandchildren, you cannot just help yourselves to pay for their education. Or did they actually leave it to you to pay the fees?

I paid most of it out of income. Two terms from savings, following redundancy. I'm a single mum so that meant cutting back on everything. And ds won a scholarship which helped

I think the thread title is asking a different question to your OP, which is why the answers are frustrating. We pay out of income, as do most people we know well enough to discuss it, but that doesn’t mean that’s the right choice for everyone.
You need to put all the data in a spreadsheet and compare each scenario, anything else is theoretical.

We paid out of income but due to an inheritance we did not have a mortgage. Paid less into pensions and now DS has finished Uni we are paying 40% of salaries into pensions . We are high earners so very tax efficient.

This
unless you are financially ok doing it which you clearly aren’t, don’t stress yourself out

Is your DC already at a private school? If not, is there a scholarship they would be suitable for.

Could you pay off the mortgage (as you say it is small), and then pay from income (and forget the pension, which assuming is a SIPP will be compounding anyway)? I'd hang on to my investments and top up where possible, personally, relying on filling the ISA (no tax at the end).
We send private, and the answer for us is no mortgage to pay now, and we earn significantly less than you!

Annually 18k short with around 90k in pension contributions and 15-18k holiday budget

I’m clearly not financially okay? Alright then 🤣