Baby boomers require good advice for passing on wealth
ALTHOUGH it has been suggested many grandparents are spending the kids’ inheritance, research shows that they are much more likely to be focused on passing money on to the next generation.
“Indeed, fears have been voiced that they are often putting the needs of other family members before their own entitlement to a financially-secure retirement,” says Shona Barr of Affinity IFA Limited.
“The last few years have seen property values soar, meaning that many older people have built up considerable wealth in their homes.
“In addition, theirs is the generation that received loan-free education and many also benefited from generous final-salary pension schemes.
“Young people in the UK are facing a lot of financial pressure. Wages have been slow to rise; inflation has been climbing too. The jobs market comprises more low-paid, low-skilled jobs than it did a few years ago.
There’s far less economic certainty for the current generation, meaning it’s far more difficult for them to buy a property or save enough to enjoy a comfortable retirement.
“It’s often been said that these ‘Millennials’ change jobs frequently and aren’t sufficiently engaged with savings or pensions.
“However, the facts don’t support this. A report from the Resolution Foundation found that ‘Millennials’ are staying with their employers for longer than previous generations, focusing on job security rather than chasing pay rises.
“Research has also shown that in the past three years, more ‘Millennials’ than their counterparts in ‘ Generation X’ - those born between the 1960s and early 1980s - have increased their pension contributions. In addition, HMRC figures for 2016 showed that 2.7m under-35s were contributing to a personal pension plan, the highest number since 2001.
The advent of auto-enrolment is likely to be a positive contributing factor here.
“’Baby-boomers’ are increasingly aware of the difficulties their children and grandchildren are facing, and worry about how they will get by with less property wealth, smaller pensions and a higher cost of living. Many grandparents want to give their money away during their lifetimes to help their families and to reduce the amount of inheritance tax that might otherwise be payable on their estates.
“But that may not be the best strategy. An IFA will help you plan your finances in a taxefficient way, so that you enjoy your later years whilst helping family members get a good start in life.”