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Expat Investor : November 2008
STATISTICS AND ANALYSES Don’t bank on the inheritance ? 21% said that they will continue to work beyond retirement. The young proved resilient to the current economic difficulties with over a quarter (26%) of those aged 18-35 feeling better off now than 12 months ago and more likely to feel optimistic about the next 12 months than those aged 36 and over. In addition to remaining upbeat about their financial future, over half of those under 36 are keeping an eye on the future and say they plan to save more going forward. Commenting on the findings, A medley of statistics and analyses revealing much about our responses to saving, investing and spending our money. More than one in five (22%) adults aged 26-35 years are hoping to cash in their inheritance to fund their retirement, according to research from Standard Life. However, with over half (55%) of those aged 55-65 feeling worse off now than they did 12 months ago and 45% of same age bracket predicting they will be worse off in another 12 months time, Standard Life warns not to bank on an inheritance alone to fund retirement. The latest wave of the Standard Life Savings and Investment Index also found: ? 8% intend to use the money tied up in their property to fund retirement ? 17% plan to move to a smaller property to fund retirement Andrew Tully, Pensions Policy Manager, says, “With each generation living longer than the last, and the cost of living rocketing, many parents’ plans of leaving behind an inheritance could be foiled. Taking responsibility for the future and not relying solely on a generous inheritance could mean financial freedom and peace of mind in years to come.” Julie Hutchison, Standard Life’s Head of Estate Planning adds, “For those who are able to leave a nest egg for their children and grandchildren, it’s important to check that they are maximising the tax advantages available to them. Any inheritance amounts above £312,000 are potentially taxed at 40%, making a large dent in the potential nest egg. Taking time to write a Will and to seek advice from a qualified financial adviser is time well spent and could possibly save thousands in IHT.” Expat Money– the definitive personal finance manual for Brits abroad THIS BOOK COULD SAVE YOU THOUSANDS OF POUNDS EXPAT MONEY is the unique personal finance guide for Brits abroad. It explains simply and clearly how to make the most of your money whenever and wherever you want. THIS BOOK COULD SAVE YOU MANY THOUSANDS OF POUNDS. EXP EXPAT MONEY The Definitive Personal Finance Manual for Brits Abroad HANNAH BEECHAM & JOHN O’MAHONY Topics covered include: ? currency exchange ? offshore banking ? banking abroad ? best buy savings products ? offshore mortgages ? expat investment opportunities ? insurance and health cover ? non-resident status – the expat’s best-kept secret ? dealing with the tax authorities - home and away EXPAT MONEY offers a comprehensive introduction to all aspects of expatriate personal finance and answers those essential money questions you’re sure to encounter. Whether you’re leaving to work, to retire or buying a second home, don’t leave the UK without it! About the author Hannah Beecham – the expat expert – is the most experienced and longest- serving journalist and editor in the expatriate finance sector. She was a founding member of the Financial Times magazine, The International, and for 11 years has been the editor of Expat Investor, as well as offshore finance editor of the International Express. EXPAT MONEY – the only guide to expatriate personal finance matters is published by Summersdale (paperback, £8.99) and available through all good bookshops and internet booksellers or through www.summersdale.com 4 EXPAT INVESTOR ? November 2008 expatinvestor.com Parents fork out £233bn to support their adult kids New research from insurance, pensions and investments group LV= reveals that parents spend a staggering £233bn on supporting their adult children, and are foregoing their own financial freedom to support their children. The study, which was carried out amongst adults aged 40 years and over who have children 18 years and over, found that nine out of 10 parents (94%) continue to contribute financially towards education and other major purchases such as houses and cars, plus living expenses, once their children have reached ‘adulthood’. Over half of all parents surveyed (55%) admitted to helping their adult children with general living costs, indicating that the ‘credit crunch’ and rising living costs are impacting on the finances of adult children. Nigel Snell, Communications Director, tells Expat Investor,“Parents certainly like to financially contribute, if they can, towards large purchases for their adult children, such as weddings and deposits for first homes. However, it seems that the current economic climate is impacting on day-to-day finances too. Parents are the hardest hit, with a large proportion admitting that they are helping to cover their children’s living expenses, as well as meeting their own financial commitments.” Parental contributions Overall parents contribute £21,540 to their children, after they have reached ‘adulthood’, in the areas shown in the table below. Mr Snell concludes, “Our study shows that parents can no longer expect their children to pay their own way once they have flown the nest. More than ever it’s true to say that having children means signing up to a lifetime financial commitment. Many parents will have had to put some plans on hold to manage the costs associated with raising a family, and once their children are old enough, parents should begin to encourage their own children to make small provisions, so that the financial burden can be reduced and parents can enjoy more financial freedom in retirement.” What parents financially helped with What they spend on average First Home Savings and Investments £5,602 63% of parents have contributed more than £3,000 towards their adult child's first home, with 31% contributing more than £9,000. £3,340 64% have contributed more than £1,000 towards their adult children's savings and investments, with 22% donating more than £5,000. First Car Wedding University Fees Travelling £1,702 42% of parents contribute more than £1,000 to the cost of their child's first car, with 15% of parents contributing more than £3,000. £3,111 19% contributed more than £5,000 towards their child's wedding. £2,245 per year, totalling £6,735 (based on a three year degree course) 21% of parents spend more than £3,000 a year on their child's university fees. £1,050 25% of parents contributed more than £1,000 towards their adult child's travel costs. Total £21,540* * This does not include contributions towards general living costs, which 55% of parents admitted to helping their adult children with or other costs that may contribute towards. The changing face of retirement AEGON research reveals a significant shift in the way 50 to 65 year-olds are viewing retirement, showing how role models such as Harrison Ford and Madonna are turning the ‘baby boomers’ into a generation of ‘grandad-olescents’. Less than one in three (29%) says they intend to stop working when they reach retirement age despite the vast majority believing they would at least “get by” financially if they were to do so. But are these expectations grounded in reality and what financial needs will this generation EXPATEXP MONEY HANNAH BEECHAM & JOHN O’MAHONY