Financial Planning, Retirement Planning

How to Gift Money to Your Family and Still Save For Retirement

2 September 2021

Saving for retirement is one of the most important financial decisions a person will make in their lifetime. However, if your kids still live with you or you want to financially support your adult children, it can be difficult to build your retirement fund.

As Australians are having children later in life, many find themselves having to provide for their family and save for retirement all at once – especially if you are planning for early retirement.

It is possible to do both of these important financial tasks at once, but you have to map out your budget carefully.

The most important thing is not to avoid or delay your retirement planning.

Delaying will only make preparing for retirement more difficult in the later years. It’s best to make small steps now so you can secure a comfortable retirement. 

Doing this may affect your budget or may have tax implications. On the other hand, if done right, it can increase your government benefits and pension.

Support Your Kids While Saving for Retirement: How to Do it

In the past, it was more common to pass on money to your children through inheritance. However, nowadays, many parents want to help their children financially while they are still alive. Or maybe you have young grandchildren that you want to gift money to?

Giving money to your family may be something that brings you joy, but you need to be careful because doing this may not be as simple as you think. Obviously, you need to consider your own budget first but you should also be aware of the tax implications on both you and your children.

Plus, some families will still have older kids at home while they are saving for retirement. While it’s a given that you will support your kids in whichever way possible, it’s worth speaking to a financial adviser to help you maximise your retirement savings as well – whether that is through investments or your superannuation.

Stay on Track with Your Retirement

If your children are young, you will have plenty of time to save for retirement and even save money for them while you work and earn a living. If you start saving when your children are young, you may have 20 or 30 years to map out your retirement plan.

However, if you are starting your plan with only a few years left until you retire, it’s worth looking at quick ways you can make a big financial difference and give your retirement fund a boost!

No matter what age you start saving for retirement, it is best to look into your finances and see if you are making the most of your retirement savings.

While being able to help your children out financially could be incredibly fulfilling, be cautious of depleting your own funds. The last thing you want is to run out of money in your own retirement and then have to rely on your kids for support. 

The Best Way to Give Money to Your Children or Grandchildren

If your children are adults earning their own income, consider the best way to give them money that will minimise tax for all involved. 

While the person you gift money to will not have to pay tax, they will have to declare any interest they received from that money. 

Also, if you are receiving the Age Pension or other government benefits, there are limits on how much of your money or assets you can gift.

Individuals and couples (combined) can give up to $10,000 in cash gifts and assets each financial year. However, this amount is limited to $30,000 over five consecutive financial years.1

Saving for Retirement

Whenever you deal with your finances, it is best to consider your personal financial capabilities and situation. Remember that the information provided in this article is general, and before doing anything, consider seeking personalised advice from a financial advisor so you can achieve all your financial goals.

If you are looking for a professional financial planner in the Gold Coast, Cambio Group can help! Our goal is to deliver positive change in the lives of our clients. 

Book a complimentary consultation with us today!


DISCLAIMER: The information (including taxation) in this website does not consider your personal circumstances and is of a general nature only – unless otherwise stated. You should not act on the information provided without first obtaining professional advice specific to your circumstances.

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