Leaving a financial legacy

28 May 2025

Leaving a financial legacy: how to support your family without jeopardising your retirement

For many of us, helping our children or grandchildren get ahead – whether it’s contributing to a home deposit, paying for education or leaving an inheritance – is a natural desire as we reach the later years of life. But financial experts warn that giving too much, too soon, can put your own retirement security at risk.

We are living longer than ever before, meaning our retirement savings may need to last 20 to 30 years or more. Rising living costs, aged care expenses and health care needs can place significant pressure on even the most carefully managed nest egg. So before offering financial support to loved ones, it’s important to ensure your own future is protected.

While you may wish to gift large amounts to your children early in retirement, this can lead to stress later on if your own funds begin to run out. And there’s nothing generous about giving away money now, only to rely on your family for support later in life.

One strategy is to gift smaller amounts over time, rather than handing over a lump sum. This allows you to monitor your financial situation as your retirement progresses. Another option is to consider non-financial ways of helping – such as providing care for grandchildren or sharing your professional skills to help family members build their own success.

It’s also important to seek advice on potential tax implications, pension eligibility and gifting rules. In Australia, Centrelink’s gifting rules mean that giving away assets above certain thresholds could affect your age pension entitlement for up to five years.

Lending rather than giving could be an advantageous alternative. It helps maintain healthy financial boundaries, prevents dependency on parental support, teaches financial responsibility and protects your retirement savings.

Estate planning is another key consideration. Having a valid, up to date will and discussing your wishes with your family can help avoid confusion or conflict later on. Tools like testamentary trusts may provide greater control over how your legacy is distributed and can offer tax advantages for your beneficiaries.

Ultimately, the greatest gift you can give your family is your own financial security – ensuring you can live comfortably and independently throughout retirement, while still being in a position to help when it truly matters.