Shirley Ballas: Hello, I'm Shirley Ballas and welcome to Rewirement, the retirement
Shirley Ballas: podcast from Legal & General. This is the podcast where I
Shirley Ballas: meet retirees and would- be retirees embarking on the most
Shirley Ballas: fabulous years of their lives. There's plenty of inspiration and
Shirley Ballas: honest talk too. My expert panel here with helpful ideas
Shirley Ballas: and information to help you reset and rewire for the
Shirley Ballas: retirement you want. In our final episode of the series,
Shirley Ballas: we're talking about a subject that's close to many of
Shirley Ballas: our hearts. If you have children or grandchildren or loved
Shirley Ballas: ones who would benefit from some extra money, what options
Shirley Ballas: do you have if you want to help them out
Shirley Ballas: financially whilst you're still around?
John: I think my concern has more been provision for my wife.
Debbie: Until you asked me that, I hadn't even considered my
Debbie: children in retirement.
Shirley Ballas: I'll be chatting to Legal & General's Sara McLeish, and MoneyMagpie's
Shirley Ballas: Jasmine Birtles to get some answers. But first, for the
Shirley Ballas: very last time, let's catch up with the groups of
Shirley Ballas: people who shared their perspectives on retirement with me. We're
Shirley Ballas: going to hear from Colin, Tracy and John again today.
Shirley Ballas: John's already retired and loving it, but Colin is still
Shirley Ballas: a few years off. They both have grown up children.
Shirley Ballas: Tracy, on the other hand, is younger and still very
Shirley Ballas: much focused on work and her teenage children. So how
Shirley Ballas: do their different life stages change how they feel about
Shirley Ballas: providing for their children in retirement? Colin's just become a
Shirley Ballas: grandfather for the very first time. I asked him if
Shirley Ballas: you planned to leave any inheritance for his child.
Colin: We're not really planning to leave anything. Obviously, whatever's left
Colin: in the estate when the time comes will go to
Colin: them. They're both sort of fairly financially independent and set
Colin: up. They've been very fortunate in that they went to
Colin: university, they got decent degrees, they've both got decent jobs,
Colin: although my daughter's no longer working now that she's a
Colin: mom and loving being a mom. And we love being grandparents
Colin: as well. So we're not really planning to... It's not
Colin: a definite strategy to leave them a set amount of
Colin: money. I think we have talked about it very briefly.
Colin: They've really said we want you to enjoy your lives
Colin: and go out and do the things you want to
Colin: do, rather than sort of sit at home thinking, " No,
Colin: we mustn't do anything because it leaves more money for
Colin: them at the end of the day."
Shirley Ballas: And I've got a son and all I ever thought
Shirley Ballas: about was planning and making sure he has something when
Shirley Ballas: I'm gone.
Colin: [ crosstalk 00: 02: 44].
Shirley Ballas: Yeah, it's funny, isn't it?
Colin: Yeah.
Shirley Ballas: And also, helping along the way so I could enjoy
Shirley Ballas: it. I could see him enjoy it and I was
Shirley Ballas: here to enjoy it, and already planned for when he
Shirley Ballas: has a grandchild.
Colin: Right.
Shirley Ballas: Tracy, the same question?
Tracy: That's that I haven't really thought about. My children are 15 and 12,
Tracy: so they're both at secondary school. So the next bit
Tracy: really is thinking about sort of helping them through uni
Tracy: or higher education. That's the next bit. So I haven't really thought
Tracy: about making provision for them later on. I've made a
Tracy: will. We've done that. So God forbid, if anything happens,
Tracy: they're all sorted. But yeah, I haven't thought about that
Tracy: really, and maybe that is something that I should think about.
Shirley Ballas: So after this conversation, you'll have a think about that?
Shirley Ballas: Maybe when they have grandchildren, do you want to help
Shirley Ballas: them go to school? Do you plan to take them
Shirley Ballas: on holidays? Are you making provisions even, not necessarily for
Shirley Ballas: your children, but for your grandchildren?
Tracy: I haven't even thought about grandchildren, Shirley. That's a scary
Tracy: thought. Oh my goodness. My head has not being in that
Tracy: place at all. I've got my kids and they're my
Tracy: children. They are our children.
Shirley Ballas: It is a little bit longterm thinking though, isn't it?
Tracy: Yeah.
Shirley Ballas: It's a longterm thing. Because what we tend to do
Shirley Ballas: is we think about it as it's happening, as they
Shirley Ballas: turn 18, " Okay, now they're getting married and I have
Shirley Ballas: to pay for the wedding, and now they've got children
Shirley Ballas: and how do I help the children? And they have
Shirley Ballas: to go to school," and so on and so forth.
Shirley Ballas: We tend to think about it as it happens. When
Shirley Ballas: my son was 21, my mother- in- law left me
Shirley Ballas: quite a lot of nice jewelry, and I talked to
Shirley Ballas: my son about wills and money and this, and, " One
Shirley Ballas: day when you have a family," and he just closed
Shirley Ballas: the conversation down. He didn't even want to talk about it at
Shirley Ballas: 21. I mean, I've been divorced from his dad a
Shirley Ballas: long, long time. We've both got different opinions. His dad says, "
Shirley Ballas: He'll get mine when I die," and I'd like him
Shirley Ballas: to have some of mine when I'm living so I
Shirley Ballas: can see the grandchildren enjoy it and so on.
Tracy: Yeah. Oh, that's definitely the way that we want to go,
Tracy: is to share what we've got.
Shirley Ballas: Colin, how do your children feel about finances, your finances?
Colin: Our finances rather than their finances? I think somebody else
Colin: mentioned they didn't really start off with much and neither
Colin: or my wife did. So we feel that we've built
Colin: up what we've got and we've already been able to
Colin: start our kids off with the money to help them
Colin: through university, which has enabled them to upskill and have experience and
Colin: get decent jobs themselves. So that they really set themselves,
Colin: so I don't think they've got any expectation and they
Colin: would rather that we went out and enjoyed ourselves. Having
Colin: said that, we helped our daughter out with her wedding
Colin: three, four years ago, with a significant lump sum to
Colin: put on a nice wedding. It wasn't an extravagant wedding,
Colin: but it was a fantastic day, best day. It was
Colin: even better than my wedding, to be honest, and everyone
Colin: said that.
Shirley Ballas: John, do your children have any expectation of receiving any
Shirley Ballas: money from you or any financial help whatsoever in your retirement?
John: Well, I have been able to help them somewhat. We helped our son with
John: regard to the purchase of his flat, not very much
John: because he didn't need very much. Now, there's been one
John: or two other things, though I don't think they particularly expect anything, though certainly
John: they will get something. I think my concern has more
John: been, Shirley, for provision for my wife. My father died
John: when he was 68 and my mother was 10 years younger
John: and she was a widow for 25 years. She was
John: very fortunate that she was left a reasonable amount of
John: money by her father, and dad hadn't taken his pension,
John: so that helped. I don't think I'm going to leave
John: this earth too early, but you never know. So I
John: thought that was quite important because my wife gave up work
John: when our son, the first one, was born, and then
John: very much worked on a part time basis thereafter. And
John: so, she hasn't got a lot of money behind her.
John: So basically, I want to make sure that everyone's provided for,
John: and if I can leave that lump sum, draw down
John: the 25% at some stage, and the rest can be
John: left for the rest of the family. So I don't think they have
John: an expectation. I'd like to think they'd rather have me here.
Shirley Ballas: There seems to be so much variety in how everyone
Shirley Ballas: thinks about their money in the future. I put the
Shirley Ballas: same question to Sue and Debbie. Sue is retired and
Shirley Ballas: living life to the full with her many hobbies and
Shirley Ballas: groups, but Debbie is younger with two teenage children and
Shirley Ballas: a busy job in London. I asked her about her plans.
Debbie: That's a really interesting question because until you asked me
Debbie: that, I hadn't even considered my children in retirement. I
Debbie: would have imagined my children would, by that point, be self-
Debbie: sufficient and providing for themselves.
Shirley Ballas: Because we all want to think of our children as
Shirley Ballas: independent, I love it that my son is independent, but
Shirley Ballas: at the back of the mind as a mother, I
Shirley Ballas: always think, what if? I know that's a little bit
Shirley Ballas: my character, maybe a downfall, I'm not sure, but what
Shirley Ballas: if this happens and how would he cope? Do you
Shirley Ballas: think about those things?
Debbie: Yeah, we do think about those things. And both the
Debbie: kids, we put money away for them. It was mainly
Debbie: for educational purposes. So when they got to 18, they'd
Debbie: have a small nest egg to either help them with the
Debbie: university, help get a car, that kind of thing, a
Debbie: small nest egg. And both of them, I mean, the older one now
Debbie: has that, he has access to it and hasn't spent
Debbie: it yet. The younger one, we're building it and it
Debbie: will be the same when she gets to 18. But
Debbie: we hadn't really thought that much further ahead. I mean,
Debbie: that is possibly something we will do as we near retirement,
Debbie: but we haven't considered that at the moment.
Shirley Ballas: So for example, if they turn 25 and they suddenly
Shirley Ballas: decide they're going to get married and they both got
Shirley Ballas: decent jobs, but not enough to put them on the
Shirley Ballas: property ladder, and your son, daughter says, " Mom, is there
Shirley Ballas: any chance that you can help us out here?" Could
Shirley Ballas: you do that? Do you think about that?
Debbie: We haven't really thought that far ahead, which is possibly
Debbie: a failing. I think we're too busy thinking about the
Debbie: near future, but also our retirements as well. So yeah,
Debbie: we haven't. Perhaps that's something we should think about.
Shirley Ballas: I like that. Sue, how did you go about helping
Shirley Ballas: your children become independent before you retired?
Sue: We helped the children before we retired by... We did
Sue: give them help with a deposit when they wanted to
Sue: buy... Well, it was flats initially. All three of them
Sue: now have their own homes. We also helped them because
Sue: my mother- in- law died and left half her property,
Sue: my husband's got a sister, left half her property to
Sue: my husband, and he shared that between the three children
Sue: because we didn't feel we needed it and they did.
Sue: So that was a bit of a help because you
Sue: need a fair bit of a deposit nowadays and people
Sue: can't save it.
Shirley Ballas: They just can't find it at a young age.
Sue: Yes, they're now paying 200 pound a month less on
Sue: the mortgage than they were renting.
Shirley Ballas: It's no doubt a moving subject. Every parent wants to
Shirley Ballas: be there for their children, but circumstances don't always make
Shirley Ballas: it possible to help financially and everyone's different. I find
Shirley Ballas: it hard to get my own son to talk to
Shirley Ballas: me about money, but I think it's so important to
Shirley Ballas: have those brave conversations upfront. One thing I want to
Shirley Ballas: understand is how best to share money with my family
Shirley Ballas: whilst I'm still around to enjoy them enjoying it. Fortunately,
Shirley Ballas: help is at hand. Thanks for joining me. We have
Shirley Ballas: Sara McLeish, CEO of Legal & General Financial Advice, and money
Shirley Ballas: expert and writer, Jasmine Birtles. Welcome.
Jasmine Birtles: Hi there.
Sara McLeish: Thank you.
Shirley Ballas: Right. Jasmine, you're well known for your TB tips on
Shirley Ballas: finances. How often are you stopped in the street for
Shirley Ballas: advice on issues relating to family and money?
Jasmine Birtles: Yes, I do get stopped occasionally. It's quite funny. But
Jasmine Birtles: what happens more often is that I get emailed. And
Jasmine Birtles: it's actually got to the point now where I get
Jasmine Birtles: so many that we've actually set up message boards on moneymagpie.
Jasmine Birtles: com. So I say, " Put the question on message boards
Jasmine Birtles: and I'll answer it." And sometimes it's me, sometimes it's one
Jasmine Birtles: of my team members, but it does get answered ultimately.
Shirley Ballas: Sara, what are the main reasons you come across for
Shirley Ballas: people wanting to share money with their families whilst they're
Shirley Ballas: still around?
Sara McLeish: Well, Shirley, there is so many reasons why our customers
Sara McLeish: want to share money with their loved ones and their
Sara McLeish: families, but one of the most popular reasons we see
Sara McLeish: is of course helping their children and their grandchildren to get
Sara McLeish: onto that all- important housing ladder and to buy their
Sara McLeish: first home. As we heard from Sue earlier, buying a
Sara McLeish: property now requires a huge amount of money up front,
Sara McLeish: not just for a deposit, but for all of the
Sara McLeish: other costs involved. And we've seen a lot of parents and
Sara McLeish: grandparents wanting to help their loved ones with those costs.
Sara McLeish: But we've also seen plenty of customers supporting family members by
Sara McLeish: funding a life experience or an ambition, be that a
Sara McLeish: wedding, a degree, a new business, or to pay for
Sara McLeish: the family holiday of a lifetime.
Jasmine Birtles: That would be me.
Shirley Ballas: Jasmine, what sorts of things should people consider before they
Shirley Ballas: make plans to share their money?
Jasmine Birtles: I think the things that one should consider before making plans
Jasmine Birtles: like that are really how long you're likely to live
Jasmine Birtles: and how much you're going to need to spend. And
Jasmine Birtles: we have a tendency to underestimate how much we're going
Jasmine Birtles: to spend. So it's a good idea just to, for
Jasmine Birtles: a start, look at your statements from the bank for
Jasmine Birtles: the last year or so and see what you've been
Jasmine Birtles: spending. Now you could say to yourself, " Oh, I won't
Jasmine Birtles: spend on this," but why shouldn't you? Why shouldn't you
Jasmine Birtles: have a decent life? And then the big thing of
Jasmine Birtles: course is care costs, and those are going to be
Jasmine Birtles: much bigger than you would expect. So I think it's
Jasmine Birtles: a really, really good idea to share your wealth while
Jasmine Birtles: you're alive. Apart from anything else, it gives other people
Jasmine Birtles: the chance to say thank you. But I think you
Jasmine Birtles: need to be careful, particularly if you're young, you're only
Jasmine Birtles: just coming into retirement, 50s, 60s, even 70s. People are
Jasmine Birtles: living until hundreds at the moment, particularly women. So I
Jasmine Birtles: think it's a good idea to leave quite a bit
Jasmine Birtles: of a contingency for later on.
Shirley Ballas: There's something else going on my list. Okay. Sara, do
Shirley Ballas: you think we have different attitudes about sharing money today
Shirley Ballas: compared to previous generations?
Sara McLeish: Absolutely. I mean, so much has changed, Shirley. Firstly, and
Sara McLeish: probably most importantly, the good news is that we're all living
Sara McLeish: so much longer and now retirement is a 20 or 30 year
Sara McLeish: event for most people. And because of that, there's a
Sara McLeish: huge amount of opportunity now for retirees to watch their
Sara McLeish: children and their grandchildren really enjoy their legacy firsthand. And we're
Sara McLeish: seeing more and more of our customers wanting to give
Sara McLeish: these, what we call living inheritances. I think the second
Sara McLeish: thing that's really changed is that we no longer have
Sara McLeish: free further education and the cost of buying a house
Sara McLeish: is higher than it's ever been before. So our children,
Sara McLeish: our grandchildren, need more financial support than they've ever needed.
Shirley Ballas: What can people do if they want to help out their
Shirley Ballas: children or grandchildren, but need to make sure they have
Shirley Ballas: enough to cover their whole retirement. If some people are
Shirley Ballas: borrowing against their home, what is the knock on effect
Shirley Ballas: in a few years time?
Sara McLeish: Well, helping children or grandchildren is a really big financial
Sara McLeish: decision, and it should be approached as just that. When
Sara McLeish: weighing up a decision like this, there's so many factors
Sara McLeish: to take into consideration, not least whether you've got enough
Sara McLeish: money to last you for those 20 or 30 years
Sara McLeish: of retirement and that you can gift that money without
Sara McLeish: leaving yourself short. I'd always recommend that you speak to
Sara McLeish: a financial advisor to get some really expert advice on
Sara McLeish: what the implications will be for you and the best
Sara McLeish: course of actions for your particular circumstances. I think especially
Sara McLeish: when it comes to things like gifting money to family,
Sara McLeish: these financial decisions can carry a lot of emotion, and
Sara McLeish: what financial advisors can bring is independence, objectivity to that
Sara McLeish: process. So if you don't have a financial advisor, if
Sara McLeish: your friends aren't able to recommend you one, then visit unbiased. co.
Sara McLeish: uk to find a financial advisor in your area.
Shirley Ballas: Legal & General have done some research into how people are
Shirley Ballas: funding gifts to their family in retirement. What were the findings?
Sara McLeish: Yes. So every year, we run this really fascinating study
Sara McLeish: that's called the Bank of Mum and Dad. And year
Sara McLeish: after year, what we see is that there are thousands
Sara McLeish: of people over 55 who are helping their loved ones
Sara McLeish: and that the Bank of Mum and Dad is becoming more
Sara McLeish: generous with every year that passes. So last year, in 2019,
Sara McLeish: the Bank of Mum and Dad was the 11th largest
Sara McLeish: mortgage lender in the UK. It lent six and a
Sara McLeish: half billion pounds to children and grandchildren. And in most
Sara McLeish: cases, that was as a gift with no strings attached
Sara McLeish: and no requirement to pay back that loan. Over half
Sara McLeish: of the time, the Bank of Mum and Dad is
Sara McLeish: just using cash reserves to help children, whereas others were
Sara McLeish: withdrawing from their savings and investments, and about 10, 15% were
Sara McLeish: considering releasing equity from their home to make a gift
Sara McLeish: to their children. But some of this lending can come
Sara McLeish: at a cost and it does sometimes come with sacrifices. So
Sara McLeish: 15% of people that gifted money to their children last
Sara McLeish: year had to accept a lower standard of living as
Sara McLeish: a result, and 6% of them postponed their own retirement
Sara McLeish: date to enable them to help their children and grandchildren.
Sara McLeish: So some big sacrifices going on there.
Shirley Ballas: The question of inheritance tax is a big one. What
Shirley Ballas: options do people have for sharing their money efficiently? Will
Shirley Ballas: there always be an issue around gifting whilst you're alive?
Jasmine Birtles: Well, yeah, very good questions there. I mean, whether there will
Jasmine Birtles: always be an issue, I don't know. I suspect there
Jasmine Birtles: will because, for quite a while, people were trying to
Jasmine Birtles: get around inheritance tax rules by, effectively, giving their property
Jasmine Birtles: to their children, but actually living in it still. And they
Jasmine Birtles: had to bring rules against that. But so long as
Jasmine Birtles: you give money away more than seven years before you
Jasmine Birtles: pass on, frankly, you can give what you like. They
Jasmine Birtles: do say that you can give up to 3000 pounds
Jasmine Birtles: a year, even within that seven year time. But if
Jasmine Birtles: you're planning on living a good 10, 20, 30 years, you can
Jasmine Birtles: give them your house now, so long as you're not
Jasmine Birtles: living in it. You could give all sorts of things
Jasmine Birtles: away. So it is worth considering that, and that's another
Jasmine Birtles: good reason for transferring money to the younger generations earlier, rather
Jasmine Birtles: than later. But it's also good to know about the
Jasmine Birtles: threshold, and that has changed a bit. If the value
Jasmine Birtles: of your estate is less than 325, 000 pounds, well,
Jasmine Birtles: nobody will have to pay any tax. But also, if
Jasmine Birtles: you give away your home to your children, and that
Jasmine Birtles: includes adopted, foster or stepchildren, or your grandchildren, then your
Jasmine Birtles: threshold actually can increase to 500,000. That's a recent thing
Jasmine Birtles: that they've brought in because people have been so fed up
Jasmine Birtles: about paying inheritance tax on homes that are really often quite ordinary.
Shirley Ballas: Some people like to give to charity or support causes
Shirley Ballas: that mean a lot to them. Are the rules different there?
Jasmine Birtles: I think giving to charity is a fantastic idea, particularly
Jasmine Birtles: if you haven't got any friends and you hate your
Jasmine Birtles: family. I mean, give it all to charity. This is
Jasmine Birtles: one thing I often say because people don't make a
Jasmine Birtles: will. I mean, I would like it to be mandatory that
Jasmine Birtles: everybody has to make a will. People often think, " Oh,
Jasmine Birtles: I'm not going to make a will because I don't
Jasmine Birtles: really care who has it," but there are charities out
Jasmine Birtles: there. And actually, not only can you leave money to
Jasmine Birtles: charity inheritance tax free, but if you leave more than
Jasmine Birtles: 10% of your estate to charities, then the people who
Jasmine Birtles: actually inherit the rest, they have a reduced inheritance tax
Jasmine Birtles: rate. Because usually, inheritance tax is 40%. But if you've
Jasmine Birtles: given a good chunk to charities, then they pay 36%,
Jasmine Birtles: which, okay, it's not like a massive drop, but it
Jasmine Birtles: all helps frankly.
Shirley Ballas: 40% to 36% if you leave 10% to the charity.
Jasmine Birtles: Yeah. So if it's 10% or more, so if you
Jasmine Birtles: leave at least 10% of your estate to charity... That
Jasmine Birtles: can also include, by the way, your local football club.
Jasmine Birtles: If it's a sort of community sports club, that counts
Jasmine Birtles: as well. And you can do it to various charities. There
Jasmine Birtles: might be things that you really care about, animals, children, politics,
Jasmine Birtles: whatever, and it's a really good way to give and
Jasmine Birtles: cut down on your tax bill, well, other people's tax bill.
Shirley Ballas: I like that> I'll take that because I support men's mental health, so that's an interesting
Shirley Ballas: one for me.
Jasmine Birtles: That would be great. Yes, they would be so grateful.
Jasmine Birtles: This is the way that a lot of charities keep
Jasmine Birtles: going frankly.
Shirley Ballas: What key questions do you think people need to ask
Shirley Ballas: themselves before they make decisions about sharing from their retirement fund?
Sara McLeish: I would say, again, it's just so important to seek
Sara McLeish: financial and legal advice here, not least around the tax
Sara McLeish: implications and inheritance tax in particular. There's lots of great
Sara McLeish: free resources out there online, but obviously everyone's financial situation
Sara McLeish: is unique and a financial advisor could help you tailor
Sara McLeish: a plan for your own specific situation. Questions that I'd
Sara McLeish: be asking myself, what are the tax implications of doing this
Sara McLeish: from an income tax, but also an inheritance tax perspective? Will
Sara McLeish: this leave me short? As we said earlier, somebody in
Sara McLeish: their early 60s can expect to live 20 or 30 years in
Sara McLeish: retirement. Do you have enough funds to see you through
Sara McLeish: that very extended period? How prepared are you for the
Sara McLeish: unexpected? What does your rainy day fund look like? Do
Sara McLeish: you have enough money if the boiler breaks down, if
Sara McLeish: you need to repair your roof, et cetera? And the
Sara McLeish: final thing I'd suggest is having a really open conversation
Sara McLeish: with your family about this. We're not a nation that
Sara McLeish: likes to talk openly about money, but there really is no substitute
Sara McLeish: for getting around that kitchen table and talking about what
Sara McLeish: everybody's financial circumstances and needs are.
Shirley Ballas: Thanks so much to Sara and Jasmine for chatting with
Shirley Ballas: me. I've loved meeting our incredible rewirees and have been
Shirley Ballas: so moved and inspired by the conversations we've had. I
Shirley Ballas: really wish them every happiness in their futures, whether they're
Shirley Ballas: filled with narrow boats, music, camper vans, or loved ones.
Shirley Ballas: We've also been joined by some of the cleverest minds
Shirley Ballas: in money across this series, and it's definitely given me
Shirley Ballas: some things to think about. I hope it has you.
Shirley Ballas: The world of money and retirement is changing all the
Shirley Ballas: time and who knows what possibilities the future holds? You
Shirley Ballas: can find out more about retirement planning at legalandgeneral. com/
Shirley Ballas: retirement. Thanks for listening. I'm Shirley Ballas wishing you the
Shirley Ballas: most fun- filled and colorful retirement.