37% of retirees are helping their families financially – are you? 

12 June 2025

Every year, provider Scottish Widows produces a Retirement Report that breaks down how attitudes to retirement are changing, and what retirees need to look out for in future.

Its 2024 report found that:

• Retirement standards have improved overall in the last 10 years – pension participation has increased, meaning that pension wealth has risen and the gender pension gap has narrowed (but not disappeared).
• On the other hand, 38% of prospective retirees are not on track to achieve even a minimum standard of living once they stop working, meaning there is more to do for many people to be able to retire comfortably.
• 37% of retirees say that they are helping family financially in some way, highlighting the fact that retirees are prioritising gifting.

Drawing on that final point, if you are approaching or already in retirement, helping your children and grandchildren may be a priority. You could even have other family members or friends who require some financial support and want to help out. But, as the above evidence indicates, retirement affordability is still a big question mark for many families.

So, it is imperative that you assess your financial circumstances in full before helping others. Much like the “oxygen mask” instructions you often hear before a plane takes off, ensuring you’re stable before giving resources away could be better for everyone in the long run.

Here is what to consider if you are planning to give funds away in retirement.

It is useful to pinpoint the “what” and “why” before handing over funds

If a family member asks you for support, it is often useful to cover the basics and ensure you’re on the same page.

Try taking the “what” and “why” approach:

• What – How much does the person require, and in what form? Might they need a one-off lump sum or ongoing financial help? Knowing exactly what is required means you can proactively plan and prepare.
• Why – Is this a once-in-a-lifetime purchase such as buying their first home, or have they fallen behind on bills due to the rising cost of living? Understanding why the person needs help means you can make an informed choice.

Consider whether the funds are a gift or a loan

Once you have established the basics, it’s time to clear up a crucial detail: is the money being given as a gift or a loan?

• Gift – This implies that you cannot ask for the money back, and once handed over, the recipient can spend it as they choose.
• Loan – You are expecting to be repaid in full, potentially with interest. In this instance, it’s worth ironing out a clear agreement in writing, including the repayment time and any interest you plan to charge.

Think of your own financial stability first

As you read earlier, retirement affordability can’t be taken for granted in 2025.

With inflation remaining above the Bank of England’s target rate of 2%, the Office for National Statistics (ONS) reports, your retirement income is likely to be eroded by rising prices over time.

What’s more, the cost of travel has gone up significantly since the pandemic, with Nationwide revealing that holiday costs went up 520% between 2021 and 2025.

These are just two examples of how your income could be depleted faster than you expect once you retire. With this in mind, you may want to reconsider your own financial circumstances before gifting money to a family member.

If you’re not sure where to start, consider:

• Ensuring you have an emergency fund of between three and six months’ expenses saved up
• Revisiting your retirement spending plan and considering whether giving the gift will affect it
• Leaving room for investment fluctuations and inflation
• Making plans to pay for care if you need it.

A financial planner can conduct a full assessment of your circumstances, meaning you’re able to gift wealth with confidence.

Think about your Inheritance Tax strategy, especially in light of new changes

Lastly, it is worth taking the time to think about how giving financial gifts during retirement could help both your family and your future tax bill.

As announced in the 2024 Autumn Budget, from April 2027 onwards, unused pension funds are set to be included within the Inheritance Tax (IHT) bracket for the first time. At the time of writing (June 2025), pensions don’t form part of a person’s estate when they die and can be passed down IHT-free.

Together with your properties, cash and investments, your pension(s) could incur an IHT bill when you pass away, leaving your family with less. Gifting could be a way to mitigate your taxable estate – essentially, you’re passing wealth into your family’s hands today in order to avoid it being eroded by tax down the line.

However, there are several important gifting rules to be aware of, and not all gifts are tax-free.

It is important to seek independent advice to ensure your gifting plans are tax-efficient and financially viable for you, especially once you have retired.

Work with us

Our financial planners can help you form a gifting strategy with confidence, giving your family the wealth they deserve while reducing tax where possible.

Email info@depledgeswm.com or call 0161 8080200 to learn more.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

The Financial Conduct Authority does not regulate estate planning or tax planning.