‘My parents are being reckless with their pension. Should I warn them?’

Growing up, my parents were always very frugal and used to save everything they earned. We were taught never to get in debt under any circumstances. So it has been a huge surprise to see them change so drastically since they retired eight years ago.  They have treated the whole […]

Growing up, my parents were always very frugal and used to save everything they earned. We were taught never to get in debt under any circumstances. So it has been a huge surprise to see them change so drastically since they retired eight years ago. 

They have treated the whole family to two holidays already and want to take my family and my brother’s to Spain again next year, provided everything goes back to normal by summer. 

They’ve bought a new Mercedes and are planning to buy a second home in Malaga. 

The problem is that I know they can’t afford it. I helped them plan their retirement and saw their savings so I know that if they carry on they won’t have any pension left at this rate. 

I know it would upset them if I refused to go away with them and they would be offended if I told them I think they are being reckless but I don’t want to see them struggle later on. Should I warn them?

LH, Cheshire

Money is a taboo subject for many families. It can be tricky to know whether or not to get involved. 

It sounds as though your parents have trusted you to help organise their finances in the past so they must value your opinion. You seem convinced that they are spending too much money and risk running out of money during their retirement. 

If you are right, they should have the state pension to fall back on, which is £9,110 a year to those who receive it in full. However, that is unlikely to be enough to cover all their needs.

It sounds like you are really concerned about them and the thought of them running out of money is really playing on your mind. If you are that worried it is a good idea to let them know. You could ask them if they are following the retirement plan that you had worked on together and point them towards getting financial advice. 

By speaking to them you might find that they have savings that you didn’t know about. After all, you said they have always been on the safe side when it comes to making big financial decisions. 

Perhaps they have come into some money over the last eight years or discovered a pension pot they had lost track of. They might have plans to rent out the second home they plan to buy as a form of income. There could be an explanation for the sudden spending that could put your mind at rest.

If they don’t, then you can walk them through your calculations and explain your reasoning. People do tend to be touchy when it comes to money but make it clear that you are thinking about their best interests. After all, it shows you care. 

That is, unless you are mainly concerned about them spending away an inheritance that you hoped to receive. In this case, it is up to them how they spend their lifetime savings. 

It sounds like your parents are very active and want to make the most of these years by spending their hard-earned savings on experiences that everyone will remember for a long time. They may not be able to keep this up for long as they get older so try to find a way to continue making these memories without costing them too much money.

There is no harm in suggesting that you help pay towards the holiday and if you can’t afford it then suggest somewhere cheaper. 

What do you think? Let us know in the comments section below and by emailing [email protected]

You can also put any question to us (and anonymously) by using the email address above.

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