For many parents and grandparents, helping loved ones financially is one of life’s greatest rewards. Whether it’s contributing towards a house deposit, helping with university costs or providing support during difficult times, it’s natural to want to give your family the best possible start.

However, with ongoing pressures on household finances and the possibility of spending several decades in retirement, many people face an important question: Can I afford to help my children without putting my own retirement at risk?

There’s no single answer that works for everyone, but it’s a decision that deserves careful thought.

Start with your own financial security

It’s easy to put your family’s needs ahead of your own, particularly when you want to see your children achieve major life milestones.

Before making a significant financial gift, it’s worth reviewing your own retirement plans. Consider whether your pension savings, investments and other assets and expected retirement income are likely to support your anticipated expenditure and financial needs in later life.

The MoneyHelper guide to helping adult children about money and provides useful guidance on discussing financial support and encouraging financial independence.

Think beyond today’s costs

Retirement can last longer than many people anticipate. According to the Office for National Statistics (ONS) Life Tables, a 65-year-old man in the UK could expect to live a further 18.7 years on average, compared with 21.2 years for a woman. .

These figures are averages, and some individuals will live considerably longer. During retirement, you may need to account for inflation, changing living costs, potential care expenses and unexpected financial commitments.

Giving away money today could reduce the financial flexibility you have later on.

That doesn’t mean you shouldn’t help your family, but it’s important to consider how any financial support could affect your longer-term financial wellbeing.

Consider all the options

Helping your children financially doesn’t always have to mean giving away a large lump sum.

Depending on your circumstances, you may decide to provide smaller gifts over time, contribute towards specific expenses or simply offer guidance and support as they build their own financial future.

It’s also worth understanding the potential tax implications of making financial gifts. Certain gifts may qualify for Inheritance Tax exemptions, while others could remain relevant when calculating the value of your estate.

The Government’s guidance on Inheritance Tax and gifting explains the relevant rules and available exemptions. Tax treatment depends on individual circumstances, and tax rules can change.

Balance generosity with peace of mind

Supporting your family financially can be rewarding, but it’s equally important to consider your own financial security.

Having a retirement plan that takes into account your expected income, expenditure and potential future needs can provide greater clarity when deciding how much financial support you may be able to offer.

Regularly reviewing your retirement plans can help you understand whether your financial plans remain appropriate as your circumstances change, particularly before making significant financial commitments to others.

Finding the right balance

Helping your children financially can be incredibly rewarding, but it is important to consider the effect it could have on your own financial future.

Everyone’s circumstances are different, and the right approach will depend on your retirement objectives, family priorities and overall financial position.

At iPensions Wealth, we work with clients to develop and regularly review retirement plans that take into account their individual circumstances, financial objectives and longer-term needs.

Whether you’re considering providing financial support to family members or reviewing your own retirement arrangements, professional financial advice can help you assess your options and make informed decisions about your financial future.

Investment risks

Past performance is not a guide to future returns. The value of investments and any income may go down as well as up This may be partly the result of exchange rate fluctuations) and an investor may not get back the full amount invested. The information, data, analysis, and opinions presented herein are provided as of the date written and are subject to change without notice. Every effort has been made to ensure the accuracy of the information provided, but iPensions Wealth Limited makes no warranty, express or implied regarding such information.

Important Information

This communication is for iPensions Wealth Clients only and is not for general consumer use.

Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. The commentary does not constitute investment, legal, tax or other advice and is supplied for information purposes only. Issued by iPensions Wealth Limited, Second Floor, Marshall House, 2 Park Avenue, Sale, M33 6HE, UK. Authorised and regulated by the Financial Conduct Authority.