24 / 40
24
|
THE INVESTOR
Gallery Stock, Getty Images. Sources: 1, 4, 6, Keeping it in the family, Capital Economics for St. James’s Place,April 2017; 2 jrf.org.uk, June 2016; 3 pwc.co.uk, February 2016; 5 legalandgeneral.com, May 2017; 7 saga.co.uk, September 2016; 8 cebr.com, February 2016; 9 rroij.com,
March 2016; 10 time.com, June 2014; 11 givingpledge.org, June 2016; 12 bbc.co.uk, March 2014
those aged 55 to 85 with more than
£50,000 in investable assets do not
intend to transfer any wealth in their
lifetime; the most commonly cited
reason they give is to ‘maintain their
current lifestyles and enjoy old age’
6
.
It is tempting to brand these as the
people wilfully spending the kids’
inheritance.And it is true that the
higher age groups do use their
money on cars, recreation and travel,
with the over-50s now accounting
for most of the nation’s spending on
travel and tourism
7
. But before getting
judgmental it’s worth bearing in
mind that the average cost of raising
a child to the age of 21 recently
jumped to £230,000, or £373,000 for
parents who send their offspring to
private schools
8
. Many of the spenders
will already have shelled out six- or
even seven-figure sums on their
families.And it’s not just recreational
spending that fuels reluctance to give;
it also reflects the need to save,
especially for social care or health
provision in our declining years; hardly
luxuries at a time when longevity rates
continue to rise.
Several high-profile figures have
been quoted as saying they intend to
spend as much as possible before they
die and live out their lives in comfort.
And those spenders can quote the
findings of retirement experts and
psychologists
9
.These warn that doing
‘nothing’ for the rest of your life does
not make for a meaningful retirement.
The now ubiquitous bucket list for
retirees sets out clear and specific
goals which can motivate them to
accomplish things and keep life after
work and children satisfying.
Alternatives to handing down wealth
to the family have become popular
with the very rich.There are two
distinct motives here: one to prevent
children being spoiled or ‘burdened’
by massive wealth; the other to funnel
money to where it is most needed, by
addressing the problems besetting the
world’s poor.
It may be counterintuitive for the
average parent but many of the very rich
feel, far from extreme wealth being an
advantage in life, it presents yet another
pressure on children. Celebrity chef
Nigella Lawson was reported as saying
that she wouldn’t be leaving her
children an inheritance: ‘It ruins
people not having to earn money
10
.’
Now billionaires have the choice to
sign up to the Giving Pledge, which
invites the world’s wealthiest
individuals and families to commit to
giving more than half of their wealth
to philanthropy or charitable causes.
The roster of names has grown to
more than 150: Bill and Melinda
Gates, Elon Musk (PayPal,Tesla,
SpaceX), Lord Ashcroft, David
Sainsbury, Richard Branson and
Warren Buffett all feature
11
.
Apportioning wealth in a way which
all generations see as somehow
equitable will be a major preoccupation
of society in the coming decades. It
may be difficult to find a hard-and-fast
guide to how much you should give
away and to whom – or to define
the point at which you can settle
back comfortably and say that you
have done your bit. Inevitably a great
deal depends on individual family
circumstances.Those who are
separated or divorced, or within
families riven by internal conflict,
may have tougher decisions to make.
Either way, financial planning is
vital if you are to maximise the impact
you and your money will have.Tax
considerations loom large – there is
the option of setting up trusts for
children, for example. And the stakes
are a lot higher now that the over-55s
have the freedom to access pension
pots and, as then pensions minister
SteveWebb famously declared, buy
a Lamborghini
12
.
When considering the issue, it may
be worth bearing in mind two distinct
precepts.The first is that it is more
blessed to give than to receive.This
needs to be tempered by a second: that
before thinking about helping your
nearest and dearest, the first step is to
make provision for yourself.
Psychologists
warn that doing
‘nothing’ for the
rest of your life
does not make
for ameaningful
retirement
INTERGENERATIONAL WEALTH