WEBVTT - Sharing money with the family 0:00:00.370 --> 0:00:06.269 Hello, I'm Shirley Ballas and welcome to Rewirement, the retirement 0:00:06.269 --> 0:00:10.260 podcast from Legal & General. This is the podcast where I 0:00:10.260 --> 0:00:14.290 meet retirees and would- be retirees embarking on the most 0:00:14.340 --> 0:00:18.500 fabulous years of their lives. There's plenty of inspiration and 0:00:18.540 --> 0:00:22.880 honest talk too. My expert panel here with helpful ideas 0:00:22.880 --> 0:00:26.619 and information to help you reset and rewire for the 0:00:26.619 --> 0:00:31.470 retirement you want. In our final episode of the series, 0:00:31.639 --> 0:00:34.510 we're talking about a subject that's close to many of 0:00:34.510 --> 0:00:38.300 our hearts. If you have children or grandchildren or loved 0:00:38.300 --> 0:00:42.180 ones who would benefit from some extra money, what options 0:00:42.180 --> 0:00:44.089 do you have if you want to help them out 0:00:44.089 --> 0:00:46.389 financially whilst you're still around? 0:00:46.830 --> 0:00:51.159 I think my concern has more been provision for my wife. 0:00:51.260 --> 0:00:55.139 Until you asked me that, I hadn't even considered my 0:00:55.140 --> 0:00:56.670 children in retirement. 0:00:57.090 --> 0:01:02.020 I'll be chatting to Legal & General's Sara McLeish, and MoneyMagpie's 0:01:02.050 --> 0:01:06.580 Jasmine Birtles to get some answers. But first, for the 0:01:06.580 --> 0:01:09.499 very last time, let's catch up with the groups of 0:01:09.500 --> 0:01:13.959 people who shared their perspectives on retirement with me. We're 0:01:13.959 --> 0:01:17.470 going to hear from Colin, Tracy and John again today. 0:01:18.069 --> 0:01:22.229 John's already retired and loving it, but Colin is still 0:01:22.229 --> 0:01:25.500 a few years off. They both have grown up children. 0:01:25.970 --> 0:01:28.850 Tracy, on the other hand, is younger and still very 0:01:28.850 --> 0:01:32.639 much focused on work and her teenage children. So how 0:01:32.640 --> 0:01:36.499 do their different life stages change how they feel about 0:01:36.500 --> 0:01:41.059 providing for their children in retirement? Colin's just become a 0:01:41.060 --> 0:01:45.119 grandfather for the very first time. I asked him if 0:01:45.119 --> 0:01:47.570 you planned to leave any inheritance for his child. 0:01:48.950 --> 0:01:52.820 We're not really planning to leave anything. Obviously, whatever's left 0:01:53.140 --> 0:01:56.570 in the estate when the time comes will go to 0:01:56.570 --> 0:02:01.330 them. They're both sort of fairly financially independent and set 0:02:01.330 --> 0:02:04.919 up. They've been very fortunate in that they went to 0:02:04.919 --> 0:02:07.950 university, they got decent degrees, they've both got decent jobs, 0:02:08.010 --> 0:02:10.190 although my daughter's no longer working now that she's a 0:02:10.190 --> 0:02:14.710 mom and loving being a mom. And we love being grandparents 0:02:14.710 --> 0:02:18.410 as well. So we're not really planning to... It's not 0:02:18.470 --> 0:02:21.239 a definite strategy to leave them a set amount of 0:02:21.239 --> 0:02:24.139 money. I think we have talked about it very briefly. 0:02:25.290 --> 0:02:27.669 They've really said we want you to enjoy your lives 0:02:27.709 --> 0:02:29.329 and go out and do the things you want to 0:02:29.329 --> 0:02:31.870 do, rather than sort of sit at home thinking, " No, 0:02:31.870 --> 0:02:34.409 we mustn't do anything because it leaves more money for 0:02:34.410 --> 0:02:35.410 them at the end of the day." 0:02:35.970 --> 0:02:38.880 And I've got a son and all I ever thought 0:02:38.880 --> 0:02:43.190 about was planning and making sure he has something when 0:02:43.200 --> 0:02:43.411 I'm gone. 0:02:43.411 --> 0:02:44.930 [ crosstalk 00: 02: 44]. 0:02:45.010 --> 0:02:46.001 Yeah, it's funny, isn't it? 0:02:46.001 --> 0:02:46.040 Yeah. 0:02:46.040 --> 0:02:49.370 And also, helping along the way so I could enjoy 0:02:49.370 --> 0:02:51.750 it. I could see him enjoy it and I was 0:02:51.750 --> 0:02:54.540 here to enjoy it, and already planned for when he 0:02:54.540 --> 0:02:55.560 has a grandchild. 0:02:55.570 --> 0:02:55.600 Right. 0:02:56.900 --> 0:02:58.180 Tracy, the same question? 0:02:58.720 --> 0:03:04.109 That's that I haven't really thought about. My children are 15 and 12, 0:03:04.630 --> 0:03:07.299 so they're both at secondary school. So the next bit 0:03:07.299 --> 0:03:10.309 really is thinking about sort of helping them through uni 0:03:10.310 --> 0:03:15.190 or higher education. That's the next bit. So I haven't really thought 0:03:15.190 --> 0:03:22.559 about making provision for them later on. I've made a 0:03:22.560 --> 0:03:26.010 will. We've done that. So God forbid, if anything happens, 0:03:26.850 --> 0:03:33.139 they're all sorted. But yeah, I haven't thought about that 0:03:33.139 --> 0:03:35.969 really, and maybe that is something that I should think about. 0:03:36.119 --> 0:03:38.610 So after this conversation, you'll have a think about that? 0:03:38.610 --> 0:03:41.060 Maybe when they have grandchildren, do you want to help 0:03:41.060 --> 0:03:44.749 them go to school? Do you plan to take them 0:03:44.750 --> 0:03:47.950 on holidays? Are you making provisions even, not necessarily for 0:03:47.950 --> 0:03:49.590 your children, but for your grandchildren? 0:03:49.910 --> 0:03:52.130 I haven't even thought about grandchildren, Shirley. That's a scary 0:03:52.130 --> 0:03:58.020 thought. Oh my goodness. My head has not being in that 0:03:58.020 --> 0:04:01.920 place at all. I've got my kids and they're my 0:04:01.920 --> 0:04:04.020 children. They are our children. 0:04:04.589 --> 0:04:06.891 It is a little bit longterm thinking though, isn't it? 0:04:06.891 --> 0:04:06.971 Yeah. 0:04:06.990 --> 0:04:08.820 It's a longterm thing. Because what we tend to do 0:04:08.820 --> 0:04:11.430 is we think about it as it's happening, as they 0:04:11.430 --> 0:04:14.240 turn 18, " Okay, now they're getting married and I have 0:04:14.240 --> 0:04:17.310 to pay for the wedding, and now they've got children 0:04:17.310 --> 0:04:19.260 and how do I help the children? And they have 0:04:19.260 --> 0:04:23.010 to go to school," and so on and so forth. 0:04:23.010 --> 0:04:25.670 We tend to think about it as it happens. When 0:04:25.990 --> 0:04:29.310 my son was 21, my mother- in- law left me 0:04:29.310 --> 0:04:32.830 quite a lot of nice jewelry, and I talked to 0:04:32.830 --> 0:04:35.930 my son about wills and money and this, and, " One 0:04:35.930 --> 0:04:37.900 day when you have a family," and he just closed 0:04:37.900 --> 0:04:40.069 the conversation down. He didn't even want to talk about it at 0:04:40.289 --> 0:04:42.589 21. I mean, I've been divorced from his dad a 0:04:42.589 --> 0:04:45.990 long, long time. We've both got different opinions. His dad says, " 0:04:45.990 --> 0:04:48.869 He'll get mine when I die," and I'd like him 0:04:48.870 --> 0:04:51.279 to have some of mine when I'm living so I 0:04:51.279 --> 0:04:53.730 can see the grandchildren enjoy it and so on. 0:04:54.310 --> 0:04:58.310 Yeah. Oh, that's definitely the way that we want to go, 0:04:58.870 --> 0:05:00.710 is to share what we've got. 0:05:01.349 --> 0:05:06.310 Colin, how do your children feel about finances, your finances? 0:05:07.849 --> 0:05:12.440 Our finances rather than their finances? I think somebody else 0:05:12.440 --> 0:05:15.440 mentioned they didn't really start off with much and neither 0:05:15.839 --> 0:05:19.409 or my wife did. So we feel that we've built 0:05:19.479 --> 0:05:21.460 up what we've got and we've already been able to 0:05:21.800 --> 0:05:24.930 start our kids off with the money to help them 0:05:24.940 --> 0:05:29.520 through university, which has enabled them to upskill and have experience and 0:05:29.520 --> 0:05:33.449 get decent jobs themselves. So that they really set themselves, 0:05:33.529 --> 0:05:36.990 so I don't think they've got any expectation and they 0:05:36.990 --> 0:05:40.760 would rather that we went out and enjoyed ourselves. Having 0:05:40.760 --> 0:05:43.529 said that, we helped our daughter out with her wedding 0:05:43.529 --> 0:05:47.069 three, four years ago, with a significant lump sum to 0:05:47.070 --> 0:05:50.010 put on a nice wedding. It wasn't an extravagant wedding, 0:05:50.010 --> 0:05:52.460 but it was a fantastic day, best day. It was 0:05:52.460 --> 0:05:55.080 even better than my wedding, to be honest, and everyone 0:05:55.080 --> 0:05:55.669 said that. 0:05:55.750 --> 0:05:59.960 John, do your children have any expectation of receiving any 0:05:59.960 --> 0:06:04.160 money from you or any financial help whatsoever in your retirement? 0:06:05.000 --> 0:06:09.849 Well, I have been able to help them somewhat. We helped our son with 0:06:10.560 --> 0:06:13.469 regard to the purchase of his flat, not very much 0:06:13.469 --> 0:06:16.650 because he didn't need very much. Now, there's been one 0:06:17.120 --> 0:06:22.849 or two other things, though I don't think they particularly expect anything, though certainly 0:06:22.960 --> 0:06:27.009 they will get something. I think my concern has more 0:06:27.010 --> 0:06:32.599 been, Shirley, for provision for my wife. My father died 0:06:32.599 --> 0:06:35.830 when he was 68 and my mother was 10 years younger 0:06:36.029 --> 0:06:39.409 and she was a widow for 25 years. She was 0:06:39.409 --> 0:06:42.309 very fortunate that she was left a reasonable amount of 0:06:42.310 --> 0:06:46.900 money by her father, and dad hadn't taken his pension, 0:06:46.900 --> 0:06:51.249 so that helped. I don't think I'm going to leave 0:06:51.250 --> 0:06:54.780 this earth too early, but you never know. So I 0:06:54.789 --> 0:06:59.779 thought that was quite important because my wife gave up work 0:07:00.359 --> 0:07:03.849 when our son, the first one, was born, and then 0:07:03.849 --> 0:07:09.109 very much worked on a part time basis thereafter. And 0:07:09.229 --> 0:07:11.300 so, she hasn't got a lot of money behind her. 0:07:12.890 --> 0:07:17.809 So basically, I want to make sure that everyone's provided for, 0:07:17.810 --> 0:07:20.760 and if I can leave that lump sum, draw down 0:07:20.760 --> 0:07:25.000 the 25% at some stage, and the rest can be 0:07:25.000 --> 0:07:29.559 left for the rest of the family. So I don't think they have 0:07:29.560 --> 0:07:32.129 an expectation. I'd like to think they'd rather have me here. 0:07:34.110 --> 0:07:37.300 There seems to be so much variety in how everyone 0:07:37.300 --> 0:07:40.520 thinks about their money in the future. I put the 0:07:40.520 --> 0:07:44.640 same question to Sue and Debbie. Sue is retired and 0:07:44.640 --> 0:07:47.300 living life to the full with her many hobbies and 0:07:47.300 --> 0:07:51.950 groups, but Debbie is younger with two teenage children and 0:07:51.950 --> 0:07:56.240 a busy job in London. I asked her about her plans. 0:07:57.500 --> 0:08:01.970 That's a really interesting question because until you asked me 0:08:01.970 --> 0:08:07.260 that, I hadn't even considered my children in retirement. I 0:08:07.260 --> 0:08:12.650 would have imagined my children would, by that point, be self- 0:08:12.650 --> 0:08:14.840 sufficient and providing for themselves. 0:08:14.920 --> 0:08:17.240 Because we all want to think of our children as 0:08:17.300 --> 0:08:20.260 independent, I love it that my son is independent, but 0:08:20.260 --> 0:08:22.880 at the back of the mind as a mother, I 0:08:22.880 --> 0:08:25.650 always think, what if? I know that's a little bit 0:08:25.650 --> 0:08:28.640 my character, maybe a downfall, I'm not sure, but what 0:08:28.710 --> 0:08:31.720 if this happens and how would he cope? Do you 0:08:31.720 --> 0:08:32.760 think about those things? 0:08:33.100 --> 0:08:37.260 Yeah, we do think about those things. And both the 0:08:37.260 --> 0:08:41.510 kids, we put money away for them. It was mainly 0:08:41.510 --> 0:08:44.969 for educational purposes. So when they got to 18, they'd 0:08:44.970 --> 0:08:48.199 have a small nest egg to either help them with the 0:08:48.199 --> 0:08:50.920 university, help get a car, that kind of thing, a 0:08:50.920 --> 0:08:54.030 small nest egg. And both of them, I mean, the older one now 0:08:54.030 --> 0:08:56.809 has that, he has access to it and hasn't spent 0:08:57.120 --> 0:08:59.540 it yet. The younger one, we're building it and it 0:08:59.540 --> 0:09:01.890 will be the same when she gets to 18. But 0:09:01.890 --> 0:09:04.579 we hadn't really thought that much further ahead. I mean, 0:09:04.579 --> 0:09:07.600 that is possibly something we will do as we near retirement, 0:09:07.600 --> 0:09:09.620 but we haven't considered that at the moment. 0:09:09.980 --> 0:09:13.269 So for example, if they turn 25 and they suddenly 0:09:13.270 --> 0:09:16.129 decide they're going to get married and they both got 0:09:16.130 --> 0:09:18.300 decent jobs, but not enough to put them on the 0:09:18.300 --> 0:09:21.809 property ladder, and your son, daughter says, " Mom, is there 0:09:21.809 --> 0:09:24.389 any chance that you can help us out here?" Could 0:09:24.390 --> 0:09:25.830 you do that? Do you think about that? 0:09:26.130 --> 0:09:30.239 We haven't really thought that far ahead, which is possibly 0:09:30.240 --> 0:09:33.459 a failing. I think we're too busy thinking about the 0:09:33.459 --> 0:09:38.059 near future, but also our retirements as well. So yeah, 0:09:38.059 --> 0:09:40.040 we haven't. Perhaps that's something we should think about. 0:09:40.740 --> 0:09:44.040 I like that. Sue, how did you go about helping 0:09:44.040 --> 0:09:47.230 your children become independent before you retired? 0:09:47.720 --> 0:09:52.850 We helped the children before we retired by... We did 0:09:52.850 --> 0:09:56.920 give them help with a deposit when they wanted to 0:09:56.920 --> 0:10:00.089 buy... Well, it was flats initially. All three of them 0:10:00.089 --> 0:10:04.160 now have their own homes. We also helped them because 0:10:04.160 --> 0:10:08.270 my mother- in- law died and left half her property, 0:10:08.800 --> 0:10:12.030 my husband's got a sister, left half her property to 0:10:12.030 --> 0:10:15.970 my husband, and he shared that between the three children 0:10:15.970 --> 0:10:18.630 because we didn't feel we needed it and they did. 0:10:19.059 --> 0:10:23.630 So that was a bit of a help because you 0:10:23.630 --> 0:10:26.770 need a fair bit of a deposit nowadays and people 0:10:26.770 --> 0:10:27.780 can't save it. 0:10:27.829 --> 0:10:30.010 They just can't find it at a young age. 0:10:30.010 --> 0:10:33.719 Yes, they're now paying 200 pound a month less on 0:10:33.720 --> 0:10:35.550 the mortgage than they were renting. 0:10:39.679 --> 0:10:44.150 It's no doubt a moving subject. Every parent wants to 0:10:44.150 --> 0:10:48.300 be there for their children, but circumstances don't always make 0:10:48.300 --> 0:10:53.150 it possible to help financially and everyone's different. I find 0:10:53.150 --> 0:10:55.309 it hard to get my own son to talk to 0:10:55.309 --> 0:10:58.360 me about money, but I think it's so important to 0:10:58.360 --> 0:11:02.429 have those brave conversations upfront. One thing I want to 0:11:02.429 --> 0:11:05.369 understand is how best to share money with my family 0:11:05.719 --> 0:11:10.300 whilst I'm still around to enjoy them enjoying it. Fortunately, 0:11:10.500 --> 0:11:14.359 help is at hand. Thanks for joining me. We have 0:11:14.360 --> 0:11:19.429 Sara McLeish, CEO of Legal & General Financial Advice, and money 0:11:19.429 --> 0:11:23.139 expert and writer, Jasmine Birtles. Welcome. 0:11:23.770 --> 0:11:24.270 Hi there. 0:11:25.000 --> 0:11:25.500 Thank you. 0:11:26.569 --> 0:11:30.069 Right. Jasmine, you're well known for your TB tips on 0:11:30.069 --> 0:11:33.540 finances. How often are you stopped in the street for 0:11:33.540 --> 0:11:36.300 advice on issues relating to family and money? 0:11:36.490 --> 0:11:39.559 Yes, I do get stopped occasionally. It's quite funny. But 0:11:39.559 --> 0:11:43.210 what happens more often is that I get emailed. And 0:11:43.410 --> 0:11:45.929 it's actually got to the point now where I get 0:11:45.929 --> 0:11:50.030 so many that we've actually set up message boards on moneymagpie. 0:11:50.030 --> 0:11:52.559 com. So I say, " Put the question on message boards 0:11:52.559 --> 0:11:54.890 and I'll answer it." And sometimes it's me, sometimes it's one 0:11:54.890 --> 0:11:57.610 of my team members, but it does get answered ultimately. 0:11:58.110 --> 0:12:01.439 Sara, what are the main reasons you come across for 0:12:01.500 --> 0:12:04.339 people wanting to share money with their families whilst they're 0:12:04.339 --> 0:12:05.110 still around? 0:12:05.329 --> 0:12:09.189 Well, Shirley, there is so many reasons why our customers 0:12:09.189 --> 0:12:12.040 want to share money with their loved ones and their 0:12:12.040 --> 0:12:15.469 families, but one of the most popular reasons we see 0:12:15.469 --> 0:12:18.920 is of course helping their children and their grandchildren to get 0:12:18.920 --> 0:12:22.120 onto that all- important housing ladder and to buy their 0:12:22.120 --> 0:12:26.280 first home. As we heard from Sue earlier, buying a 0:12:26.439 --> 0:12:29.959 property now requires a huge amount of money up front, 0:12:29.959 --> 0:12:32.089 not just for a deposit, but for all of the 0:12:32.089 --> 0:12:35.530 other costs involved. And we've seen a lot of parents and 0:12:35.530 --> 0:12:40.950 grandparents wanting to help their loved ones with those costs. 0:12:41.199 --> 0:12:45.429 But we've also seen plenty of customers supporting family members by 0:12:45.429 --> 0:12:49.459 funding a life experience or an ambition, be that a 0:12:49.559 --> 0:12:54.200 wedding, a degree, a new business, or to pay for 0:12:54.550 --> 0:12:56.479 the family holiday of a lifetime. 0:12:56.819 --> 0:12:57.500 That would be me. 0:12:58.949 --> 0:13:02.219 Jasmine, what sorts of things should people consider before they 0:13:02.219 --> 0:13:04.010 make plans to share their money? 0:13:04.010 --> 0:13:07.920 I think the things that one should consider before making plans 0:13:07.980 --> 0:13:12.510 like that are really how long you're likely to live 0:13:12.510 --> 0:13:16.280 and how much you're going to need to spend. And 0:13:16.790 --> 0:13:19.420 we have a tendency to underestimate how much we're going 0:13:19.420 --> 0:13:21.959 to spend. So it's a good idea just to, for 0:13:21.959 --> 0:13:24.929 a start, look at your statements from the bank for 0:13:24.929 --> 0:13:27.010 the last year or so and see what you've been 0:13:27.010 --> 0:13:29.140 spending. Now you could say to yourself, " Oh, I won't 0:13:29.140 --> 0:13:31.730 spend on this," but why shouldn't you? Why shouldn't you 0:13:31.730 --> 0:13:34.339 have a decent life? And then the big thing of 0:13:34.339 --> 0:13:36.500 course is care costs, and those are going to be 0:13:37.000 --> 0:13:40.979 much bigger than you would expect. So I think it's 0:13:40.980 --> 0:13:44.170 a really, really good idea to share your wealth while 0:13:44.170 --> 0:13:46.099 you're alive. Apart from anything else, it gives other people 0:13:46.099 --> 0:13:48.469 the chance to say thank you. But I think you 0:13:48.469 --> 0:13:52.189 need to be careful, particularly if you're young, you're only 0:13:52.530 --> 0:13:56.780 just coming into retirement, 50s, 60s, even 70s. People are 0:13:56.780 --> 0:14:01.179 living until hundreds at the moment, particularly women. So I 0:14:01.179 --> 0:14:03.179 think it's a good idea to leave quite a bit 0:14:03.179 --> 0:14:04.849 of a contingency for later on. 0:14:04.849 --> 0:14:12.819 There's something else going on my list. Okay. Sara, do 0:14:12.819 --> 0:14:16.030 you think we have different attitudes about sharing money today 0:14:16.030 --> 0:14:18.220 compared to previous generations? 0:14:18.500 --> 0:14:23.220 Absolutely. I mean, so much has changed, Shirley. Firstly, and 0:14:23.340 --> 0:14:26.500 probably most importantly, the good news is that we're all living 0:14:26.500 --> 0:14:30.759 so much longer and now retirement is a 20 or 30 year 0:14:31.300 --> 0:14:34.560 event for most people. And because of that, there's a 0:14:34.560 --> 0:14:39.500 huge amount of opportunity now for retirees to watch their 0:14:39.500 --> 0:14:44.130 children and their grandchildren really enjoy their legacy firsthand. And we're 0:14:44.130 --> 0:14:46.650 seeing more and more of our customers wanting to give 0:14:46.650 --> 0:14:50.770 these, what we call living inheritances. I think the second 0:14:50.770 --> 0:14:54.720 thing that's really changed is that we no longer have 0:14:54.720 --> 0:14:58.920 free further education and the cost of buying a house 0:14:58.920 --> 0:15:02.970 is higher than it's ever been before. So our children, 0:15:02.970 --> 0:15:07.400 our grandchildren, need more financial support than they've ever needed. 0:15:07.640 --> 0:15:09.869 What can people do if they want to help out their 0:15:09.870 --> 0:15:13.240 children or grandchildren, but need to make sure they have 0:15:13.240 --> 0:15:17.210 enough to cover their whole retirement. If some people are 0:15:17.210 --> 0:15:20.530 borrowing against their home, what is the knock on effect 0:15:20.530 --> 0:15:21.680 in a few years time? 0:15:22.450 --> 0:15:26.650 Well, helping children or grandchildren is a really big financial 0:15:26.650 --> 0:15:30.940 decision, and it should be approached as just that. When 0:15:30.940 --> 0:15:33.749 weighing up a decision like this, there's so many factors 0:15:33.750 --> 0:15:37.499 to take into consideration, not least whether you've got enough 0:15:37.500 --> 0:15:40.369 money to last you for those 20 or 30 years 0:15:40.370 --> 0:15:43.629 of retirement and that you can gift that money without 0:15:43.630 --> 0:15:47.560 leaving yourself short. I'd always recommend that you speak to 0:15:47.560 --> 0:15:51.290 a financial advisor to get some really expert advice on 0:15:51.290 --> 0:15:54.270 what the implications will be for you and the best 0:15:54.280 --> 0:15:59.170 course of actions for your particular circumstances. I think especially 0:15:59.170 --> 0:16:02.009 when it comes to things like gifting money to family, 0:16:02.320 --> 0:16:05.720 these financial decisions can carry a lot of emotion, and 0:16:05.720 --> 0:16:11.360 what financial advisors can bring is independence, objectivity to that 0:16:11.410 --> 0:16:15.130 process. So if you don't have a financial advisor, if 0:16:15.130 --> 0:16:19.300 your friends aren't able to recommend you one, then visit unbiased. co. 0:16:19.530 --> 0:16:22.570 uk to find a financial advisor in your area. 0:16:23.080 --> 0:16:26.390 Legal & General have done some research into how people are 0:16:26.390 --> 0:16:30.530 funding gifts to their family in retirement. What were the findings? 0:16:30.570 --> 0:16:35.100 Yes. So every year, we run this really fascinating study 0:16:35.100 --> 0:16:38.820 that's called the Bank of Mum and Dad. And year 0:16:38.820 --> 0:16:41.399 after year, what we see is that there are thousands 0:16:41.400 --> 0:16:45.290 of people over 55 who are helping their loved ones 0:16:45.290 --> 0:16:47.920 and that the Bank of Mum and Dad is becoming more 0:16:47.920 --> 0:16:52.610 generous with every year that passes. So last year, in 2019, 0:16:53.030 --> 0:16:55.720 the Bank of Mum and Dad was the 11th largest 0:16:55.720 --> 0:16:59.200 mortgage lender in the UK. It lent six and a 0:16:59.200 --> 0:17:04.749 half billion pounds to children and grandchildren. And in most 0:17:04.750 --> 0:17:08.760 cases, that was as a gift with no strings attached 0:17:08.760 --> 0:17:13.210 and no requirement to pay back that loan. Over half 0:17:13.210 --> 0:17:15.859 of the time, the Bank of Mum and Dad is 0:17:15.859 --> 0:17:20.620 just using cash reserves to help children, whereas others were 0:17:20.919 --> 0:17:25.720 withdrawing from their savings and investments, and about 10, 15% were 0:17:25.720 --> 0:17:29.230 considering releasing equity from their home to make a gift 0:17:29.230 --> 0:17:32.350 to their children. But some of this lending can come 0:17:32.350 --> 0:17:36.129 at a cost and it does sometimes come with sacrifices. So 0:17:36.139 --> 0:17:39.570 15% of people that gifted money to their children last 0:17:39.570 --> 0:17:42.480 year had to accept a lower standard of living as 0:17:42.480 --> 0:17:46.530 a result, and 6% of them postponed their own retirement 0:17:46.530 --> 0:17:49.679 date to enable them to help their children and grandchildren. 0:17:49.740 --> 0:17:51.850 So some big sacrifices going on there. 0:17:53.240 --> 0:17:56.540 The question of inheritance tax is a big one. What 0:17:56.540 --> 0:18:01.009 options do people have for sharing their money efficiently? Will 0:18:01.020 --> 0:18:04.320 there always be an issue around gifting whilst you're alive? 0:18:04.879 --> 0:18:08.850 Well, yeah, very good questions there. I mean, whether there will 0:18:08.850 --> 0:18:11.129 always be an issue, I don't know. I suspect there 0:18:11.129 --> 0:18:14.300 will because, for quite a while, people were trying to 0:18:14.300 --> 0:18:19.230 get around inheritance tax rules by, effectively, giving their property 0:18:19.230 --> 0:18:22.490 to their children, but actually living in it still. And they 0:18:22.490 --> 0:18:27.090 had to bring rules against that. But so long as 0:18:27.090 --> 0:18:30.460 you give money away more than seven years before you 0:18:30.460 --> 0:18:33.520 pass on, frankly, you can give what you like. They 0:18:33.520 --> 0:18:36.460 do say that you can give up to 3000 pounds 0:18:36.470 --> 0:18:41.710 a year, even within that seven year time. But if 0:18:41.710 --> 0:18:45.320 you're planning on living a good 10, 20, 30 years, you can 0:18:45.320 --> 0:18:46.899 give them your house now, so long as you're not 0:18:46.899 --> 0:18:50.149 living in it. You could give all sorts of things 0:18:50.149 --> 0:18:54.929 away. So it is worth considering that, and that's another 0:18:54.929 --> 0:19:00.220 good reason for transferring money to the younger generations earlier, rather 0:19:00.220 --> 0:19:05.540 than later. But it's also good to know about the 0:19:05.800 --> 0:19:10.009 threshold, and that has changed a bit. If the value 0:19:10.050 --> 0:19:13.810 of your estate is less than 325, 000 pounds, well, 0:19:14.290 --> 0:19:18.760 nobody will have to pay any tax. But also, if 0:19:18.760 --> 0:19:21.290 you give away your home to your children, and that 0:19:21.290 --> 0:19:25.320 includes adopted, foster or stepchildren, or your grandchildren, then your 0:19:25.320 --> 0:19:29.190 threshold actually can increase to 500,000. That's a recent thing 0:19:29.190 --> 0:19:32.230 that they've brought in because people have been so fed up 0:19:32.230 --> 0:19:37.270 about paying inheritance tax on homes that are really often quite ordinary. 0:19:37.899 --> 0:19:41.100 Some people like to give to charity or support causes 0:19:41.100 --> 0:19:44.189 that mean a lot to them. Are the rules different there? 0:19:44.500 --> 0:19:47.379 I think giving to charity is a fantastic idea, particularly 0:19:47.379 --> 0:19:48.790 if you haven't got any friends and you hate your 0:19:48.790 --> 0:19:51.419 family. I mean, give it all to charity. This is 0:19:51.419 --> 0:19:55.560 one thing I often say because people don't make a 0:19:55.560 --> 0:19:59.550 will. I mean, I would like it to be mandatory that 0:19:59.550 --> 0:20:02.869 everybody has to make a will. People often think, " Oh, 0:20:02.869 --> 0:20:05.070 I'm not going to make a will because I don't 0:20:05.070 --> 0:20:07.939 really care who has it," but there are charities out 0:20:07.940 --> 0:20:12.040 there. And actually, not only can you leave money to 0:20:12.040 --> 0:20:18.119 charity inheritance tax free, but if you leave more than 0:20:18.119 --> 0:20:24.220 10% of your estate to charities, then the people who 0:20:24.240 --> 0:20:28.119 actually inherit the rest, they have a reduced inheritance tax 0:20:28.119 --> 0:20:31.609 rate. Because usually, inheritance tax is 40%. But if you've 0:20:31.609 --> 0:20:34.909 given a good chunk to charities, then they pay 36%, 0:20:34.909 --> 0:20:37.590 which, okay, it's not like a massive drop, but it 0:20:37.590 --> 0:20:38.740 all helps frankly. 0:20:39.850 --> 0:20:43.820 40% to 36% if you leave 10% to the charity. 0:20:44.520 --> 0:20:48.299 Yeah. So if it's 10% or more, so if you 0:20:48.300 --> 0:20:52.139 leave at least 10% of your estate to charity... That 0:20:52.139 --> 0:20:55.869 can also include, by the way, your local football club. 0:20:56.020 --> 0:20:58.969 If it's a sort of community sports club, that counts 0:20:58.970 --> 0:21:02.479 as well. And you can do it to various charities. There 0:21:02.480 --> 0:21:07.270 might be things that you really care about, animals, children, politics, 0:21:07.270 --> 0:21:11.510 whatever, and it's a really good way to give and 0:21:11.510 --> 0:21:14.080 cut down on your tax bill, well, other people's tax bill. 0:21:14.080 --> 0:21:19.850 I like that> I'll take that because I support men's mental health, so that's an interesting 0:21:19.850 --> 0:21:20.510 one for me. 0:21:20.770 --> 0:21:23.649 That would be great. Yes, they would be so grateful. 0:21:24.139 --> 0:21:25.929 This is the way that a lot of charities keep 0:21:25.929 --> 0:21:26.820 going frankly. 0:21:27.240 --> 0:21:29.999 What key questions do you think people need to ask 0:21:30.000 --> 0:21:34.699 themselves before they make decisions about sharing from their retirement fund? 0:21:35.399 --> 0:21:38.869 I would say, again, it's just so important to seek 0:21:38.869 --> 0:21:43.070 financial and legal advice here, not least around the tax 0:21:43.070 --> 0:21:47.899 implications and inheritance tax in particular. There's lots of great 0:21:47.899 --> 0:21:53.299 free resources out there online, but obviously everyone's financial situation 0:21:53.300 --> 0:21:56.400 is unique and a financial advisor could help you tailor 0:21:56.760 --> 0:22:01.489 a plan for your own specific situation. Questions that I'd 0:22:01.490 --> 0:22:05.530 be asking myself, what are the tax implications of doing this 0:22:05.580 --> 0:22:09.730 from an income tax, but also an inheritance tax perspective? Will 0:22:09.730 --> 0:22:13.699 this leave me short? As we said earlier, somebody in 0:22:13.700 --> 0:22:17.189 their early 60s can expect to live 20 or 30 years in 0:22:17.189 --> 0:22:20.260 retirement. Do you have enough funds to see you through 0:22:20.260 --> 0:22:24.179 that very extended period? How prepared are you for the 0:22:24.179 --> 0:22:27.830 unexpected? What does your rainy day fund look like? Do 0:22:27.830 --> 0:22:30.149 you have enough money if the boiler breaks down, if 0:22:30.149 --> 0:22:33.300 you need to repair your roof, et cetera? And the 0:22:33.300 --> 0:22:37.270 final thing I'd suggest is having a really open conversation 0:22:37.270 --> 0:22:40.710 with your family about this. We're not a nation that 0:22:40.710 --> 0:22:44.639 likes to talk openly about money, but there really is no substitute 0:22:44.639 --> 0:22:48.530 for getting around that kitchen table and talking about what 0:22:48.530 --> 0:22:51.369 everybody's financial circumstances and needs are. 0:22:56.520 --> 0:22:59.510 Thanks so much to Sara and Jasmine for chatting with 0:22:59.510 --> 0:23:03.980 me. I've loved meeting our incredible rewirees and have been 0:23:03.980 --> 0:23:08.220 so moved and inspired by the conversations we've had. I 0:23:08.220 --> 0:23:11.740 really wish them every happiness in their futures, whether they're 0:23:11.740 --> 0:23:16.480 filled with narrow boats, music, camper vans, or loved ones. 0:23:17.189 --> 0:23:20.060 We've also been joined by some of the cleverest minds 0:23:20.060 --> 0:23:23.439 in money across this series, and it's definitely given me 0:23:23.439 --> 0:23:26.300 some things to think about. I hope it has you. 0:23:27.250 --> 0:23:30.389 The world of money and retirement is changing all the 0:23:30.389 --> 0:23:35.429