“It’s the young people I feel sorry for.”
Among the elderly and the established, this phrase has been repeated over and over again during the Covid pandemic.
The economic fall-out from the crisis is being felt most acutely by younger generations, with unemployment levels among 16- to 24-year-olds rising to 13.4% – more than three times the figure for the UK as a whole (2020).*
Consequently, older homeowners who have their future financial security sorted have turned their worries to their nearest and dearest.
But before offering money towards things like the home or car of younger family members, it would be wise to think about specific goals.
Older people could be well-placed to offer immediate financial support to future generations but there are enormous benefits to setting up savings plans for a child early on too, says Melloney Underhill, Marketing Insights Manager at St. James’s Place Wealth Management.
“Whether it’s investing in a Junior ISA or child’s pension, it’ll give them a financial head start when they reach adulthood, and better prepare them to cope with challenges like these in the years to come – more so than giving them ad hoc spending money or bailing them out in an emergency.”
Before parents and grandparents worry about what type of account they should open or make any form of financial gesture they should think about what they want their money to achieve.
It’s also vital to consider the level of control required over any money disbursed and – in the case of money set aside for a grandchild’s future – when they get it.
With cash gifts, Inheritance Tax could become an issue too. Gifts in excess of allowances will only become IHT free after seven years, so life expectancy will also need to be taken into account.
With so many factors in play a conversation with an adviser invaluable.
An adviser will help people to consider a plan within the context of their objectives and the impact it could have – not just on their family’s financial wellbeing, but their own too.
Looking for ways to provide younger family members with long-term financial support in uncertain times? Want to balance giving with your own goals? Your Rhodes Wealth Management advisor is here to help, talk to us today.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief generally depends on individual circumstances.
*Office for National Statistics, Labour Market Economic Analysis, September 2020