A third of this year’s retirees still financially support family members
This year’s retirees hand out £260 a month on average to dependants, according to research by Prudential.
They are most likely to help children and children’s partners (45%), followed by grandchildren and their partners (24%). Some still support their own parents (9%) and a surprising 5% help out their grandparents.
The research revealed retirees provide financial support to help family cover everyday living costs (22%) as well as paying some or all of regular household bills (14%).
A fifth who support dependants also help pay for one-off large purchases such as a holiday or a new car and 11% cover non-essential costs such as club memberships and subscriptions.
Nearly one in every 14 of those providing financial support do so to pay for housing costs, most likely for their younger dependants, and a similar figure help to pay for long-term care for their older dependants.
Although new retirees’ incomes are squeezed by providing financial support to dependants, this isn’t stopping them from expecting to leave an inheritance.
Just over one in three (34%) plan to leave an inheritance, up from 28% among last year’s retirees. They expect to bequeath £173,000 on average.
Kirsty Anderson, a retirement income expert at Prudential, said: “With life expectancy increasing rapidly it is not unreasonable to expect the members of the Class of 2017 to be looking forward to a retirement that will last 20 years. However, for those providing financial support to their dependants it is likely to cost them an average of £62,000 over the course of their retirement – accounting for a significant proportion of their pension pot and impacting the income they can expect to live on.
“The money you give to support your loved ones is an element of retirement budget planning that is easy to overlook, and when looking to understand the likely amounts of money you’ll need in retirement, the help of a professional financial adviser or independent guidance from the likes of the Pensions Advisory Service could prove to be invaluable.”
Anderson added that for most people who are still in work it is never too late to make a difference to the quality of retirement you can look forward to.
“Saving as much as possible as early as possible in your working life should give you the best possible opportunity to build a substantial pot to support you and your family in the future,” she said.