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Parents and grandparents cut back on lifestyle to gift to their adult offspring

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A new report from Investec Wealth & Investment finds that parents and grandparents who gift money to their grown-up children and grandchildren believe they risk compromising their own standard of

A new report from Investec Wealth & Investment finds that parents and grandparents who gift money to their grown-up children and grandchildren believe they risk compromising their own standard of living by being overgenerous.
 
At 32 per cent, nearly a third of parents and grandparents aged over 55 are alredy gifting or plan to gift money to their children and grandchildren at an average of GBP5,026 a year, the study says. Of these, 18 per cent plan to take advantage of the new pension freedoms by gifting money from their newly cashed-in pension pots.
 
Grandparents and parents in London and the South East are on average the most generous while those in Wales gift the least.  However, the survey found that nearly one in five, at 18 per cent, think they’re giving away too much and 11 per cent admit to having had to cut back on their lifestyle in order to afford their generosity.    
 
Areas where cutbacks have been made by overgenerous parents and grandparents include travel (50 per cent); meals out (42 per cent); home improvement plans (39 per cent); clothes (24 per cent); hobbies (21 per cent); and food shopping (11 per cent).  In addition, 3 per cent of respondents have had to delay retirement to help finance the younger generation.
 
Commenting on the study, Chris Aitken, Head of Financial Planning at Investec Wealth & Investment, says: “It’s understandable that many grandparents want to give their grown-up children and grandchildren a helping hand financially, particularly with big ticket items such as house deposits and education fees.  But generosity has its limits and we would strongly advise people to stick to what they can afford without if affecting their own quality of life.”  
 
“This means planning to have enough capital to enjoy a long and active retirement, not forgetting that they may also need to factor in the cost of long term care.  It is a concern that recent pension freedoms could result in some grandparents gifting too much of their retirement pot without considering their potential longevity.  Anyone considering using their pension pot in this way should seek financial advice first.”
 
 
 

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