How to help prepare your children or grandchildren for their future retirement

If you’re soon-to-be or recently retired, you might have spent the last few years carefully planning for your retirement.

You might have found yourself looking at the lives of your children or grandchildren and worrying that they’re ill-prepared for their eventual retirements and aren’t taking the necessary steps to save while they’re still young.

Millennials and Generation Z have had to deal with several issues that have inhibited their early life savings, such as the effects of multiple recessions, increasingly prohibitive property costs, and an extended period of wage stagnation. This could leave them underprepared for their own future.

Read on to discover some of the unique challenges millennials and Generation Z might face in retirement and how you might be able to help your children or grandchildren better prepare.

Under-40s are less likely to own a home, possess savings, or have contributed significantly to a pension pot

According to the Guardian, the most senior of the millennial demographic are now in their early 40s and are likely to be parents themselves with their own set of financial obligations. However, compared to their parents’ generations, millennials have far less accrued wealth and savings in place.

Millennials, and to a lesser degree Generation Z, have had to deal with the dot-com crash, the 2008 global financial crisis, the pandemic, and the current cost of living crisis. This has made it far harder to save in the face of high day-to-day costs.

Rising property costs and difficulty saving for a deposit has made it difficult to get onto the property ladder

According to the Resolution Foundation’s intergenerational audit, the number of millennials living in rental property at age 30 is more than three times the rate of the baby boomer generation. Millennials are also paying more in rent, even when adjusted for inflation.

It is likely that lifelong renters will require an extra £9,000 of annual income to cover costs compared to homeowners.

Individuals with high enough incomes to save for a house deposit — or those who have received help from the Bank of Mum and Dad — may find themselves in a better retirement situation due to owning an asset.

Wage stagnation, inflation, and the cost of living crisis have made savings and pension contributions difficult

LinkedIn News UK reports that 54% of millennials say they live payday to payday, meaning retirement saving goals are a distant dream.

According to PensionBee, the majority of millennial and Generation Z workers are saving less than £100 each month into their workplace pension. Meanwhile, 27% of millennials and 17% of Generation Z report having been unable to save throughout the pandemic.

Even the State Pension could become problematic. The State Pension Age is due to rise to 67 by 2028 and is expected to rise further before millennials start reaching retirement age around 2050.

This is likely to have been a factor for the 67% of Generation Z and 52% of millennials that stated they plan to delay their eventual retirement.

3 ways you can help prepare your children or grandchildren for their eventual retirement

1. Consider gifting your wealth to your loved ones while you’re still alive

Gifting can be an incredibly tax-efficient way to help your loved ones financially cope with obstacles in their lives. It can also offer them the benefit of added time to put the money to good use, rather than waiting to inherit funds when they might already be retired themselves.

Your children or grandchildren might be able to use funds to save for the future, contribute to their pension, or to invest in order to generate growth to help with their eventual retirement plan. 

Read more: 5 useful Inheritance Tax gifts you can make that will reduce your potential tax bill

2. Weigh up using a Junior ISA to save for your young children or grandchildren

You can save up to £9,000 each year (as of the 2023/24 tax year) into a Junior ISA (JISA) for children or grandchildren under the age of 18. 

Neither you, or your loved one, will pay Capital Gains Tax (CGT) or Income Tax on interest or returns generated within a JISA. You can also encourage other family members or close friends to contribute to the JISA as well.

A JISA can help your children or grandchildren get a head start in their adult lives and help encourage them to save early and regularly.

3. Utilise the Bank of Mum and Dad to help your loved ones onto the property market

As mentioned, owning their homes could make a substantial difference to a child or grandchild’s eventual retirement outgoings. So, taking steps to help your loved ones onto the property ladder as first-time buyers, and overcome challenges such as saving for a deposit, could provide them with a massive boost.

Additionally, you could also look to leave your own property to your loved ones in your will, which they could opt to keep and live in, rent out for additional income, or sell to contribute to their savings pot.

Read more: What you need to know if you plan on becoming the Bank of Mum and Dad

Get in touch

If you’re worried about your child or grandchild’s future, it might be worth having a conversation with your financial planner to determine ways you might be able to help. 

You could even set them up with a meeting themselves to get direct advice.

The first step is to reach out by email at or call 0345 505 3500.

Please note

This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.