A money expert has revealed five top tips to ensure your baby has a £1million pension when they retire.
Even though having a baby means your cost of living has increased but your disposable income has decreased, this doesn’t have to mean you have to run out of money.
Megan Jenkins, chartered financial planner and partner at wealth management firm Saltus, provided advice on supporting children financially.
He described how parents can prepare for the cost of university or a deposit on their child’s first home, and how a newborn baby can retire with a £1 million pension.
It comes after the viral Project Mbappe meme in which parents pledged to impose harsh training sessions on their children in a bid to encourage their meteoric rise to stardom and wealth after Kylian Mbappe won the football World Cup.
A money expert has revealed five top tips to ensure your baby is a millionaire when you retire
A money expert described how parents can prepare for a deposit on their child’s first home
Ambitious parents are trying to groom their wealth in other ways, such as the trend of holding tough training sessions for their children in a bid to fuel their rise to fame after Kylian Mbappe won the soccer World Cup.
The financial expert said the hardest part is realigning the lifestyle parents once enjoyed and, potentially, the reduced income they now have.
It could mean having to rethink spending on new or expensive toys or clothes and opting for second-hand clothes.
He explained: ‘A child can receive a pension from birth; there is no minimum age.
‘Only a parent or guardian can open a boarding house for a child, but once it is up and running, anyone can contribute: parents, grandparents, godparents, friends or other family members.
‘Youth pensions are a great, tax-efficient way to build savings for your child’s retirement, through the power of compound growth.
‘Establishing a pension as early as possible means even small contributions have more time to grow and, although your child is decades away from retirement, you have helped ensure their future financial well-being.
‘The maximum you can save each year into a youth pension from birth to age 18 is £3,600, this includes up to £720 of tax relief, paid by the Government, and up to £2,880 from family members or individuals.
‘Control of the pension automatically passes to your child at age 18, however, the money remains saved until retirement age (normally accessible from age 55, but will be 57 years from 2028).
The hardest part is realigning the lifestyle parents once enjoyed and, potentially, the reduced income they now have.
Rio Ferdinand showed this Tuesday that the apple does not fall far from the tree after confirming himself as the latest defender of the Mbappé Project
Ferdinand, a highly decorated former footballer in his own right, has embraced the trend of parents committing to imposing tough training sessions on their children in a bid to encourage his meteoric rise to stardom and wealth after Kylian Mbappé won the Cup Soccer World Cup.
“However, by delaying access to the money until age 65, your child could retire with a pension of £1m through the power of compounding (five per cent each year until age 65 would equal more than £1m). million pounds). That’s potentially a return of more than 2,000 per cent.’
He told new mothers and fathers not to hesitate to ask their own parents for financial help, through their pensions.
‘If there are plans for grandparents to leave their property to their children, they could leave some money to their grandchildren through their pensions as a way of cascading wealth to the next generation.
‘The attraction of leaving a pension to grandchildren is that, depending on the age of the grandparents when they die, if the grandparents are over 75, it is taxed at the beneficiary’s marginal rate.
‘So if you have a minor or a university student who receives money from a pension, they can access it virtually tax-free, because they will have their personal allowance of £12,570 a year that they can use and this will allow them to draw it out in stages.’
It could mean having to rethink whether to spend on new or expensive toys or clothes and opt for second-hand items.
She told new mothers and fathers not to hesitate to ask their own parents for financial help, through their pensions, for their children in college.
The money expert described how parents can prepare for the cost of college
He gave the example of if a grandchild has inherited £50,000 from their grandmother’s pension, this money can be used to fund three years of university, taking £12,570 a year tax-free.
Ms Jenkins advised parents to set up a Junior ISA, allowing different family members to contribute.
She said: ‘You can start using this as a way to help pay the cost of university and if a child decides not to go to university it is a bonus for their first property deposit. You can save up to £9,000 each tax year and it’s tax-free money.
‘Family members can contribute as much or as little (subject to the provider’s conditions) as they like into the account and it will possibly be more beneficial than buying a child a material gift. Instead, you’re putting it aside for the long term, something they’ll appreciate when they’re 18, although not so much now.’
Other useful tips included having a Family Income Protection policy or a Family Income Benefit policy and updating your will.
She said: ‘During the early years, the cost of caring for and raising a child is high, so it is worth having a family income benefits policy. The policy will provide additional income in the event that a parent dies before their child turns 18.
Parents across Britain are adopting the tongue-in-cheek trend of simulatively training their children to become football prodigies from a young age and hopefully enjoy the same meteoric stardom as French ace Kylian Mbappé.
“Although the initial cost of the policy may seem high, for example you might want £20,000 a year until you are 18, you start with £360,000, but if you die after 10 years it is £120,000 instead of £360,000, Therefore, the cost is high. It is cheaper because the amount of the insured sum paid by an insurance company is much lower but corresponds to the maintenance costs of having a child, in the event that one of the parents dies.
“It is also important to ensure that your will is up to date, including the accompanying letter of wishes.”
Other parents in Britain are adopting the tongue-in-cheek trend of simulatively training their children to become football prodigies from a young age and hopefully enjoy the same meteoric stardom as French ace Kylian Mbappé.
The 25-year-old, considered one of the best players of his generation, had already won the World Cup and four Ligue 1 titles by the time he turned 21.
He is expected to leave current club Paris Saint Germain during the summer, with Real Madrid his likely destination.