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Lifecycles volumes



For older generations, university education was an easy choice. The state covered tuition fees and it was often a golden ticket to higher earnings and a more rewarding career. However, the choice for the younger generation is more nuanced. A university education now may incur significant debt and the jobs market is more competitive too. Having your support could be a positive deciding factor in whether a young person chooses to take the higher education path.

Starting early is key here. Nothing is guaranteed with investing, but £100 a month invested over 20 years at a growth rate of 5% should give a lump sum of over £40,000, enough to cover tuition fees (currently £9,250 per year ) and have a little over for living costs. With such a long time to invest, avoiding ‘reckless caution’ is key – putting money in a savings account could see its value eroded by inflation. Past performance is not a guide to future performance, but investments have generally provided better returns than cash over the longer-term.

Paying for a
higher education

If you have children or grandchildren, you know that their world is different in many ways to the one you grew up in. Their financial priorities are likely to be different too. By understanding the realities of their world you can target your financial support to give them the best start in life.

Getting on the property ladder

A combination of low wage growth and rising house prices means that for today’s twentysomethings, buying a home is already a tall order. First time buyers in the UK paid an average of £214,237 for their properties in July 2021  and deposits can be hefty, averaging as much as £59,000 according to recent research by Halifax. Our own research suggests that over a third of first-time buyers are hoping to buy their home with the help of family or friends in the next five years.  

It’s easy to see how investing for a child from their early years could make a positive difference here. If you have cash to spare, gifting money is also an option and can be a good way to mitigate Inheritance Tax, providing you survive seven years after making the gift. It is also possible to give £3,000 a year tax free. Over a number of years, these gifts can make an important difference to children who want to own their own home one day, although you can’t impose conditions on what they do with the money you gift

Supporting flexible working 

Given that they may not retire until their seventies and ‘jobs for life’ are thin on the ground, the next generation are likely to take a different approach to their working lives. They may have periods of self-employment, retraining and sabbaticals. They will need to keep their skills up to date with ongoing education and be flexible in terms of location. 

This will affect the way they need to save and manage their money. Strategies will need to be more flexible and fluid, allowing access to capital at key points. Again, parents and grandparents can help facilitate this flexibility by creating a long-term savings pot that a child can dip into through their adult lives when they need it most. 

Saving for a comfortable later life 

The onus will be very much on today’s children and teenagers, rather than, say, the government or employers, to make sure they have an adequate income that will last for the whole of their retirement. 

A sustainable

By choosing investments that support good environmental, social and governance (ESG) practices you can provide for your child in a way that helps make their future world a better place too. 


The cost of retirement

Research conducted for the Pensions and Lifetime Savings Association  took a look at what might be needed in today’s money to achieve different standards of living in retirement. These figures are after any mortgage or rent payments, social care costs or tax on pension income that may need to be paid.

Be worth your weight in gold

The next generation faces significant financial challenges: parents and grandparents who understand the problems and put themselves in a position to provide help at the right time have the power to deliver real financial security for their children and grandchildren. They are worth their weight in gold.

State Pension age will increase to 67 from 2028 and, with higher government debt, younger people may not be able to count on it as part of their income. A lot could change in the 50 to 60 years they may have to go until potentially drawing it. The vast majority will be automatically enrolled into a pension when they start work, subject to age and earnings. These schemes are vitally important but may still not be enough on their own.

It is possible to start a pension fund for a child, putting in up to £3,600 per year. These contributions are eligible for basic rate tax relief on the child’s part, even if they don’t pay any tax, so you only need to contribute £2,880. Based on current rules they won’t be able to access this money until at least age 57, so it can potentially be put into higher-risk investments targeting very long-term growth and there will be no temptation to dip into it for short term needs during their younger years.

Important Information 
For retail distribution. 

This document has been approved and issued by Santander Asset Management UK Limited (SAM UK). This document is for information purposes only and does not constitute an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Opinions expressed within this document, if any, are current opinions as of the date stated and do not constitute investment or any other advice; the views are subject to change and do not necessarily reflect the views of Santander Asset Management as a whole or any part thereof. While we try and take every care over the information in this document, we cannot accept any responsibility for mistakes and missing information that may be presented. All information is sourced, issued and approved by Santander Asset Management UK Limited (Company Registration No. SC106669). Registered in Scotland at 287 St Vincent Street, Glasgow G2 5NB, United Kingdom. Authorised and regulated by the FCA. FCA registered number 122491. You can check this on the Financial Services Register by visiting the FCA’s website Santander and the flame logo are registered trademarks.