A study by the high street bank HSBC has shown that many older people are choosing to pass on some of their wealth to their family now rather than when they die.

The research has found that half of the people questioned said they were providing financial support to family members, with around 20% helping out their children and 10% their grandchildren.  bank notes

While many pensioners can afford to do this and it is an effective way to get around inheritance tax if a gift is made more than seven years before a person dies, but there are also a great number who are sacrificing their own retirement plans by helping out family.

The Future of Retirement study found that what it calls a ‘living inheritance’ is on the increase, it is at the detriment of many people’s standard of living in retirement.

More than half of the retirees said they had shelved some of their plans for retirement because they couldn’t afford it.  Regular bucket lists for retirement include living abroad or luxury travel, starting a new business or buying high value items such as a new kitchen or a new car.

However, not all pensioners were dissatisfied with their retirement plans, with many managing to achieve what they had set out to, travelling extensively, and spending more time with their families.  Many took up hobbies such as DIY and gardening in retirement as they had more time on their hands.

It is widely considered that the new pension freedom changes which came into effect on April 6th will mean more over-55s hand over large sums of cash to their nearest and dearest.

With sudden access to their pension pots, many will be tempted to help children and grandchildren with large financial commitments such as buying a house or going to university.

Industry experts are concerned that many may simply give too much of their pension pots away, and then have to scrimp and scrape to get by in later retirement because they have run out of money.

On the other side of the coin, the number of people who are able to leave an inheritance is dwindling.  The higher cost of living, coupled with longer life expectancies means that pension pots need to go much further than in previous generations.

Whilst 58% of over-55s expect to be able to leave their family something in their will, the reality is that only around 33% will be able to do so by the time they die.