New research from Key Retirement has revealed that parents want to give away an average of £15,000 as early inheritance gifts to help their children financially now.
The data shows that 53% of parents plan to make major financial gifts to their children with an average target of £15,000 per child, while 11% expect to give more than £25,000 in gifts to each child.
Around 54% plan to fund the payouts through their savings but increasingly over-55s are looking to release cash from their home to help out family. Key’s study shows that 22% of those not wishing to, or able to use, savings would use equity release to fund their gifts.
The research found strong support for tax breaks on living inheritance with 37% of parents and grandparents saying they would gift a living inheritance if the government provided tax breaks. Key believes encouraging intergenerational gifting for major life purchases through tax breaks could play a major role in tackling intergenerational wealth issues.
34% of family members are using the money to help their children and/or grandchildren with a deposit for a new home, while 58% specifically want to help their children or grandchildren get on or move up the property ladder. Other support includes helping their family buy a car (17%) and paying for a wedding (13%).
Education is also a popular reason for parents to gift money to their family. 10% will gift money for higher education and/or training. The same amount plan to help pay off student debts.
Dean Mirfin, technical director at Key Retirement, said: “The financial squeeze on younger generations and the struggle they face in saving for homes and paying off student debt are major problems.
“It is clear parents and grandparents want to help and are already doing a lot to make gifts with more than half planning major handouts.
“The research shows high awareness of the use of equity release to fund gifts. More than two thirds were aware that they can release equity from their homes to help their loved ones.
“For those who maybe do not have the savings to make gifts, access to money which can be raised through equity release, is seen by many as the best early inheritance that people can give. It can have a dramatic effect on their families’ longer term financial wellbeing and the desire to gift remains relatively consistent across most of the UK.”