THE JOY to be had from spoiling the grandchildren may be a delight to many grandparents but new research suggests an overly generous attitude could be landing them in serious financial peril.
Nearly a third of people aged over 55 currently or plan to gift money to their adult children and grandchildren, the poll found.
Almost a fifth said they even planned to use new pension freedoms to gift money from their pension pots, potentially leaving them short of cash in retirement, and one in 10 of those surveyed admitted to cutting back on their own lifestyle to fund these gifts.
Reducing the amount they spend on travel is the most common option for overly-generous grandparents, followed by meals out, home improvement plans, clothes, hobbies and food shopping. One in 33 respondents said they went as far as delaying retirement to help finance their younger relations.
Chris Aitken, financial planning head at investment management firm Investec which commissioned the survey, said: “It is understandable that many grandparents want to give their grown-up children and grandchildren a helping hand financially, particularly with big ticket items such as house deposits and education fees. But generosity has its limits and we would strongly advise people to stick to what they can afford without if affecting their own quality of life.
“This means planning to have enough capital to enjoy a long and active retirement, not forgetting that they may also need to factor in the cost of long-term care.”
Since April, new pension freedoms have meant people aged 55 and over are no longer required to use their pension savings to buy an annuity when they reach retirement. Instead, they can access their pots how they wish, subject to their marginal rate of income tax.
“Anyone considering using their pension pot in this way should seek financial advice first,” Mr Aitken added.