Giving grandchildren financial security is an important goal for many
If you are a grandparent, it’s natural to want to help out the family. And if you’re able to give a financial boost – whether it’s a loan or a gift – to the younger generation, it can be enormously rewarding for you too.
Even during the current coronavirus (COVID-19) crisis, some grandparents may be enjoying generous final-salary pensions and are also benefiting from the property boom of recent decades, enabling them to help their grandchildren with student debts, funding education or getting them on the housing ladder. However, this is certainly not the case for everybody.
Long-term cash flow
If you’re a grandparent, it is important to secure your own lifestyle first, and only then gift what is possible. Understanding your long-term cash flow – for example, tracking income and outgoings and looking at how existing assets can support you – is key to putting a plan in place.
This will provide you with the clarity you need for your own situation and ultimately help you to make decisions about providing sustainable financial support to the younger generations as well. Much of the focus around the financial fall-out from COVID-19 has been on the recent volatility and concerns about the value of pension pots, but the pandemic has impacted all generations.
Financial support
Being a grandparent is a unique and special role in a child’s life, and research shows that nearly half (48%) of grandparents have stepped in to financially support their grandchildren during the COVID-19 outbreak, despite being concerned about their own retirement income.
Giving your grandchild financial security is an important goal for many grandparents. There are ways to save and invest for grandchildren that can have a more lasting effect on their financial independence beyond cash in a Christmas and birthday card each year. Lots of options exist that are tax efficient for them – and you too.
Rent and mortgage payments
A third (32%) of grandparents have given cash to their children, 8% have provided childcare, and 6% have helped with rent and mortgage payments. However, a quarter of grandparents haven’t been able to see their grandchildren during the lockdown periods – not even remotely.
20% of those questioned said they were worried about the value of their private pension, and a further 13% were also worried about the stability, as well as the value, of their workplace pension.
Entrepreneurial streak
Many grandparents have also shown an entrepreneurial streak to protect their retirement funds, with 45% taking action to generate income as a result of the pandemic. This includes selling items on eBay (23%) and looking for part-time work (10%).
The research shows that grandparents want to provide for their families, even if this makes them worry about their own financial future. However, it shouldn’t be the case that they are choosing their family’s financial stability over their own.