Client
Portal

The middle-aged squeeze

Back to News & Views

Juggling careers, family care and financial pressure amid rising costs and wealth transfers

Increasing longevity and evolving demographics have left many middle-aged individuals juggling careers with caring for both ageing parents and children. This issue is particularly acute for ambitious professionals who prioritised establishing their careers before starting a family in their thirties or forties.

On top of financial constraints, caring for elderly parents and young children places immense pressure on the most precious resource of all for working parents – time.

The emotional and physical toll of feeling constantly at the coalface may generate significant stress. Choosing your priorities carefully can mean disapproval from those who think your attention should be elsewhere, often focusing on them.

Rising inflation and interest rates

Has the squeeze got tighter? Rising inflation and interest rates have created clear winners and losers. Those with mortgages have been among the losers. As fixed rate deals have ended, moving onto a variable or new fixed rate has meant accepting higher payments or extending terms to keep monthly outlays the same.

Coupled with inflation, this has reduced real disposable incomes. The winners have been those who are debt-free and those who have savings and investments. Typically, these individuals are retired, and the increased income may be surplus to requirements.

The cost of education

School fees and care costs have historically risen faster than inflation. The cost of private education has soared. Fees jumped by an average of 5.1% in 2022[1]. The average cost per child is now £6,944 a term for day pupils and £12,344 a term for boarders[2]. There are big regional variations, too. With the rising cost of living, private schools have had little choice but to pass energy and food costs on to parents. Imagine those costs for a family of four.

It is no wonder house prices are so high in the catchment areas of state schools with good Ofsted ratings. Many parents or guardians rely on other sources for some or all of the fees, such as loans, inheritances or other payments.

University and housing

School may lead to university, with its accompanying student debts. Children may be dependent on their parents for longer and not leave the nest as quickly as one might hope. Rising rents mean the aspiration to get on the property ladder may only be achieved after age 30 and will require some financial assistance.

The mounting cost of care fees

If you are paying for care, the average weekly cost of a residential care home in the UK is £1,160, while average fees at a nursing home cost £1,410 per week[3]. This means residential care for a whole year (52 weeks) costs an average of £60,320, and nursing home care costs an average of £73,320 annually. Fees will vary depending on the area you live in and the home you choose.

The families of those in care homes are unlikely to pay the entire bill but may top this up to ensure a better quality of life, such as an ensuite room, visits from the hairdresser, entertainment and day trips. As parents may live some distance away from other family members, time and practicalities may create the need to move closer, leading to inevitable upheaval and losing a friendship network.

Role of inheritance

Our elderly relatives play a crucial role in the upcoming shift in wealth. They’ll be vital in the wealth transfer over the next 10-15 years. The ‘sandwich generation’ – those caring for their children and ageing parents – are set to inherit significant assets. Figures from HM Revenue and Customs (HMRC) show a record-breaking increase in Inheritance Tax (IHT) receipts, reaching £7.5 billion from March 2023 to April 2024. This is a jump of £400 million compared to the previous year and continues a trend that’s been rising for the past two decades.

With an IHT rate of 40%, nearly £19 billion in assets, beyond various exemptions and reliefs, were taxed[4]. The taxman might become the largest single beneficiary if multiple family members inherit. Given the current higher interest rates, the compounding effect of reinvested income can grow wealth even further. Therefore, financial planning is about reducing the size of estates and preventing them from growing too large.

Financial planning and gifting

Using surplus pension and investment income, for example, to help towards grandchildren’s school fees both invests in their future and reduces the growth rate of the estate. The notion of IHT planning may conjure images of esoteric and inaccessible investment schemes, but straightforward gifting can be just as effective.

In addition to utilising various allowances and reliefs available, lump-sum gifts to an individual, known as Potentially Exempt Transfers, will not be subject to IHT if you live for seven years after making the gift. If you die before then, these gifts are initially set against the available nil rate bands, so they may still be tax-free. Lump-sum gifts could be a valuable way to help a grandchild working to be a first-time buyer get a decent deposit together. The average gift for a house deposit is £25,000.

Creating a financial plan

However, for many – possibly the majority – the fear of running out of income and capital mentally eclipses the huge benefits of helping younger generations now, providing the enjoyment of seeing the positive impact on their lives. Creating a financial plan will provide the knowledge and reassurance of knowing you are financially secure, whatever the future may hold. This, in turn, will enable you to consider gifting from income and capital.

An inbuilt reluctance to discuss money matters with family members can lead to poorer long-term financial decisions and more money lost to the taxman. A lack of dialogue will also mean less influence over the choices made for you if you lose capacity – simply because your children might not know what you want to happen. Financial openness across generations is the starting point.

Source data:
[1] Schoolfeeschecker, accessed April 2024,
[2] Schoolguide, accessed April 2024.
[3] www.carehome.co.uk/advice
[4] https://britishbusinessexcellenceawards.co.uk/from-the-awards/inheritance-tax-receipts-reach-a-record-breaking-7-5

 

THIS ARTICLE DOES NOT CONSTITUTE TAX, LEGAL, OR FINANCIAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

Book your FREE, no obligation discussion today. Schedule Appointment

Sign Up to our mailing list - Receive regular news, tips and financial commentary from the Gemini Team.

Latest News

  • If you are in your 40s or 50s, you have likely contributed to a pension for quite some time. Over the years, you may have accumulated multiple employer workplace pensions. However, when did you last thoroughly examine your pension and retirement strategy? Having a documented retirement plan can help you feel more prepared for this stage of your life, ensuring you have a sufficient income when you stop working. Here, we explore several factors to consider when reviewing your savings. If you don’t yet have a plan, in this article, we consider a helpful starting point. [...]

  • Increasing longevity and evolving demographics have left many middle-aged individuals juggling careers with caring for both ageing parents and children. This issue is particularly acute for ambitious professionals who prioritised establishing their careers before starting a family in their thirties or forties. [...]

  • With 2.81 million people in the UK now away from work due to long-term sickness, ensuring employers offer comprehensive health benefits is becoming increasingly critical. This approach is essential for preventing employees from becoming too ill to work, as well as for attracting and retaining staff in a competitive job market. By providing the right health coverage, companies can support their workforce’s wellbeing, leading to higher productivity and job satisfaction. [...]

  • As we age or accumulate more wealth, protecting and preserving our assets for future generations becomes increasingly essential. This process, known as Inheritance Tax (IHT) planning, estate planning or intergenerational wealth planning, involves strategically managing your estate to minimise tax liabilities and ensure that your wealth is passed down to your loved ones in the most tax-efficient manner possible. [...]

  • Balancing the many responsibilities of motherhood can be overwhelming, often pushing long-term financial planning onto the back burner. However, effective financial planning is essential for everyone, and as a mother, you face unique challenges that require extra attention. Here are some key financial planning steps to help you take control and secure your family’s future. [...]

  • On 30 October, Chancellor of the Exchequer Rachel Reeves will deliver the Autumn Budget Statement 2024, accompanied by a comprehensive fiscal statement from the Office for Budget Responsibility (OBR). This significant event comes as the new government, elected to boost economic stability and growth, takes its first important step in addressing the nation’s financial health. [...]

  • Diversifying your portfolio places you in an advantageous position to seize opportunities across various investments as they emerge. This strategy usually results in a smoother investment journey. But how? The answer lies in the balancing act that diversification encourages. Investments that appreciate in value can offset those that are underperforming. [...]

  • Over recent years, our comprehension of the climate crisis has significantly transformed. Countries and organisations are becoming increasingly ambitious with their net zero targets, while many individuals are making lifestyle alterations to reduce their household carbon emissions. However, some remain oblivious that pensions represent one of our most potent tools for making substantial strides towards net zero. [...]

  • Early retirement typically signifies reaching financial autonomy before the statutory pension age, usually in the mid-60s. In the United Kingdom, retirees can begin drawing their State Pension at age 66. However, this retirement benchmark is set to increase to age 67 by 6 April 2028. [...]

  • The latest research reveals a significant disparity in perceptions regarding retirement experiences of the past and potential future scenarios. Over the past 50 years, a ‘hard stop’ or ‘transitional’ retirement has been the predominant way people have transitioned into retirement. A ‘hard stop’ refers to an abrupt end to working life, while a ‘transitional’ retirement involves gradually reducing working hours. [...]

  • More than three-quarters (78%) of retirees have already dipped into their pension pots by the time they retire, according to recent data[1]. Of these, more than half (52%) withdraw funds five years before their Selected Retirement Age (SRA), with 21% opting to start taking out funds nine to ten years before they retire. [...]

  • Around 7.3 million UK adults, or one in seven, encountered an attempted pension scam in the past year. Alarmingly, 14% were targeted through unsolicited calls, texts or emails, according to recent research, illustrating the aggressive tactics employed by scammers. This concerning trend has prompted a closer examination of the vulnerabilities within the pension system, especially as scammers become increasingly sophisticated in their approaches. [...]

Gemini Wealth Management Ltd is Authorised and regulated by The Financial Conduct Authority Registered in England & Wales No. 5919877 Registered Office: Gemini House, 71 Park Road, Sutton Coldfield, West Midlands B73 6BT The Financial Conduct Authority does not regulate tax and trust advice, will writing and some forms of buy to let mortgages. The guidance and/or advice contained in this website is subject to regulatory regime and is therefore restricted to those based in the UK.

Website by Mellow Marsh Software
© Gemini Wealth Management Ltd
Important Documents | Cookie Policy