My grandparents often gave me savings bonds as birthday and holiday gifts as a child. But now there are many ways to give children and grandchildren a gift that grows over time, some of which give the giver valuable tax breaks or allow you to retain some control over the money. Contributions to 529 plans and even a Roth IRA for a working teenager are other possibilities for financial holiday gifts that come with tax perks.
However, many retirees are planning to reduce their holiday spending this year. Seniors are scaling back on the number of people they buy gifts for (30 percent), according to a recent survey of 602 retirees by Principal Financial Group and Harris Interactive. For those they do buy holiday presents, they will spending less per gift (36 percent) or giving handcrafted gifts instead of purchased gifts (11 percent).
The retirees say they generally plan to spend between $101 and $500 on holiday gifts this year (45 percent) or less than $100 (24 percent). Just under half (46 percent) plan to spend less money than they did last year for the holidays, typically cutting spending by between $101 and $500. Seniors are also planning to donate less to charities this year (27 percent), travel less (23 percent), and give up hosting a holiday party (21 percent).
Tell us, will you give financial gifts to children or grandchildren this year?