Supporting family is one of the most natural things in the world. And when you’re able to help, it can be a wonderful thing to do. The key is making sure your generosity works for everyone, without compromising your own financial future and without affecting your retirement, pension or inheritance tax planning.
Whether it’s a contribution towards a first home, help with a wedding, childcare or university costs or day-to-day support, many parents approaching or already in retirement want to use their wealth to give their children and grandchildren a stronger start in life.
And when you’re in a position to help, it can be a wonderful thing to do. However, successful retirement planning is about balancing financial support for your family with protecting your own long-term security. The key is making sure your generosity works for everyone – including you.
The Bank of Mum and Dad (or Grandparents) is busier than ever
Family support now plays a big role in helping younger generations move forward.
Research from Savills found that gifts and loans from the “Bank of Mum and Dad” totalled £9.6 billion in 2024, helping 173,500 first-time buyers with an average contribution of £55,572.
That support can make a real difference. It can help adult children build their own lives:
- Buy their first home sooner
- Reduce the amount they need to borrow
- Meet university or education costs
- Cover childcare expenses
- Build savings and financial resilience
- Begin investing for their own future
But it also raises an important question: how much can you afford to give without putting your own future under pressure?
Start with your own financial plan
Before making a gift or loan, it helps to look at your own retirement planning first. This isn’t about being ungenerous. It’s about making informed decisions.
A well-structured financial plan can help you understand:
- How much income you’ll need throughout retirement
- Whether your pension savings remain on track
- The sustainability of your investments and savings
- The potential impact of inflation and rising costs
- How gifting money today could affect your future financial security
For example, a one-off gift towards a house deposit may feel manageable today. But it’s still worth checking how it affects your income, savings, investments, tax position and later-life plans.
At Insight our cashflow model can demonstrate how different scenarios could affect your future, helping you make decisions with confidence. We regularly help our clients assess whether supporting their family today can be achieved without compromising their retirement lifestyle tomorrow.
Gift, loan or something in between?
It’s also important to be clear about what kind of support you’re offering. Is it a gift? A loan? An advance on inheritance? Or help with a specific cost, such as childcare or legal fees?
Having that conversation early can avoid confusion later. It can also help everyone understand what’s expected, especially if there are siblings or wider family members to consider.
Simple questions can help guide the discussion:
- Can we afford this without changing our retirement plans?
- Will this affect our future income needs?
- Do we need the money back at any point?
- Should the arrangement be documented?
- How does this affect other children or family members?
- Are there any tax, or inheritance tax, implications we need to consider?
Don’t overlook inheritance tax and gifting rules
Many people are surprised to discover that giving money away can have inheritance tax (IHT) implications. While gifting can be an effective way to reduce the value of an estate for inheritance tax planning purposes, the rules can be complex.
Depending on your circumstances, factors that may need consideration include:
- Annual gifting allowances
- Small gift exemptions
- Gifts made from surplus income
- Potentially Exempt Transfers (PETs)
- The seven-year and fourteen-year rules
- Record keeping requirements
The right approach will depend on your objectives, your wider wealth position and your long-term retirement plans. At Insight, our professional advice can help you understand how gifting, inheritance tax planning and retirement planning fit together, ensuring your generosity is structured as efficiently as possible.
Think beyond the money
Supporting adult children is rarely just a financial decision. It can be emotional too. Many parents and grandparents often want to help because they remember how hard it was to get started.
Others recognise that today’s younger generations face housing affordability and the cost-of-living challenges that they did not.
That’s why a calm and open conversation can be so valuable. It keeps things positive. It also gives everyone confidence that the support is thoughtful, affordable and part of a bigger plan.
Helping well starts with clarity
If you’re thinking about helping your children, or grandchildren financially, independent financial advice can give you a clearer picture before you decide your next steps.
Here at Insight, we can help you understand what’s possible, what to watch out for and how your support fits with your long-term plans. That way, you can help the people you love while still protecting the retirement you’ve worked hard for.
We’re also happy to meet with your children and grandchildren to help you explain your decisions and support them on their own financial planning journey.
FAQs
Can I give money to my children without affecting my retirement?
You may be able to, but it is important to check how a gift or loan could affect your future income, savings, pension plans and later-life care needs before making a decision.
What is the best way to help adult children financially?
The right approach depends on your circumstances and the purpose of the support. Common options include a one-off gift, a loan, help with a house deposit, support with education costs or regular help from surplus income.
Should financial support be a gift or a loan?
It helps to be clear from the start. A gift does not need to be repaid, while a loan should usually be documented so everyone understands the terms and expectations.
Can gifting money reduce inheritance tax?
Gifting can form part of inheritance tax planning, but the rules are complex. Allowances, exemptions, gifts from surplus income and the seven-year rule may all need to be considered.
Why should I take financial advice before helping family?
Financial advice can help you understand what you can afford to give, how it may affect your retirement lifestyle, and whether your support fits with your wider tax, pension and inheritance planning.
Sources and further reading
https://www.savills.co.uk/insight-and-opinion/savills-news/376516/bank-of-mum-and-dad-paid-out-%C2%A39.6-billion-in-gifts-and-loans-in-2024
https://www.legalandgeneral.com/retirement/equity-release/guides/bank-of-family/our-research/
https://group.legalandgeneral.com/newsroom/press-releases/2023/10/nearly-one-in-five-18-parents-and-grandparents-who-helped-their-family-members-onto-the-property-ladder-used-their-own-property-wealth-to-do-so/
Disclaimer: information is based on publicly available data and government announcements at the time of writing (July 2026) and may be subject to change.