WHAT WILL BABY BOOMERS DO WITH THEIR WEALTH?
Although it has been suggested many grandparents are spending the kids inheritance, research1 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.
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.
THE FINANCIAL PROBLEMS FACED BY THE YOUNG
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.
DISPELLING THE MILLENNIAL MYTHS
It’s often been said that Millennials change jobs frequently and aren’t sufficiently engaged with savings or pensions. However, the facts don’t bear this out. 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.
SHARING WEALTH AMONGST THE FAMILY
Baby-boomers are increasingly aware of the difficulties facing their children and grandchildren, and worry about how they are going to 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.
If you’d like to discuss how to plan your finances in a tax-efficient way so that you enjoy your later years whilst helping family members get a good start in life, do get in touch.
1 Royal London, 2017
A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.
The information within the article is for information purposes only and does not constitute individual advice.