As budgets are stretched, it's not just mum and dad that are forking out to help their loved ones but grandparents too.
In research carried out by LV=, 86% of grandparents questioned have given cash to their grandchildren since 2012, with the average amount handed over being £30 and a few giving as much as £50,000.
A generous 75% claim to have already dipped into their savings to help grandchildren this year, with 52% planning to do so within the next five years, with the average amount they are planning to give being £1000.
Thinking of the longer-term, 17% of grandparents over the last five years have made contributions to child trust funds or savings accounts, while 5% say they have contributed towards their grandchildren's school and university fees.
Not only are grandparents funding younger grandchildren's lifestyles with 47% giving pocket money, but they are helping them throughout their lives with many regularly helping an adult grandchild out with day-to-day living costs such as bills, rent or paying the mortgage, and 11% feeling their loved ones would struggle without the money they give them.
Treats are also catered for with 12% of grandparents helping their grandchildren out on big purchases such as a car or luxury holiday, and they seem more than happy to do this with 70% saying they want to help out where they can, while 16% say they help out because the child's parents can't afford things.
A "living inheritance" is how 4% view the money they give, with 37% saying they would like to give money in the future because they want to be around to see them enjoy the money and they don't want their gifts reduced by inheritance tax later on.
New pension rules coming into force next April could see grandparents helping out even more as they become able to take all their pension savings as a lump sum, and it seems 6% are already considering taking out a significant amount of cash so they can help out their grandchildren.
Richard Rowney, of LV=, said:
"The generosity of grandparents in Britain is clear to see and it is great that so many feel comfortable enough to be able to help out their family and plan to continue doing so. However, the average retirement is now much longer than past generations and people's lifestyle and associated costs are likely to change over this period. It is important that those approaching retirement choose to structure their income in a way that offers them enough financial flexibility to enable them to remain generous, but also adapt to their changing needs.
"We would encourage those approaching retirement to seek financial advice to ensure they are able to make the most of their savings and pension funds by selecting the best solution for them."
There's nothing wrong with giving loved ones a helping hand if you can afford it, and setting up a trust fund or children's NISA is a great option to give them long-term security, but grandparents need to bear in mind that they must ensure they have enough money to last throughout their retirement.
There's no point giving money to grandchildren only to find yourself out of pocket later down the line. Ensure you have the right savings products for your retirement, do your budgeting carefully, and then if you still feel able to help your family out, you'll be able to do so content in the fact that you have financial security yourself.
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