40% RETIRED SUPPORT THEIR FAMILIES FINANCIALLY
- · Class of 2013 study shows 40 per cent of those expecting to retire this year provide financial support to dependants
- · Average contribution is £240 a month with cash for everyday living costs the most likely expense
- · Nearly one in seven retirees have children aged over 25 living with them
- · And 37 per cent believe their families still expect an inheritance
Two in five people (40 per cent) retiring this year provide financial support to their families which may be at risk as their incomes drop, according to new research from Prudential.
Stephen Pett of Legacy Trusts says “The importance of early planning by parents and grandparents to support their families financially in the future has never been greater.”
The Prudential report continues:
The insurer’s Class of 2013 research, the latest of the annual studies conducted by Prudential since 2008, tracks the financial plans and expectations of people entering retirement this year. The report shows that retirees who provide support to dependants pay out on average £240 a month to help their families, with 11 per cent paying out more than £500 a month.
Contributing to their families’ everyday living expenses was the most likely call on the finances of those expecting to retire this year. Around 15 per cent say they provide money regularly to cover items such as food or travel, while 14 per cent help with one-off non-essential items such as holidays, new TVs or even cars.
Prudential’s study also shows the make-up of UK households of those about to retire, with adult children and even grandchildren still living in the family home. Around two-thirds (68 per cent) of those planning to retire this year will have no dependants living with them.
Almost a sixth (16 per cent) of this year’s retirees have children under the age of 25 living at home, while 13 per cent have children aged 25 and over still living with them. Around four per cent even share their homes with a child’s partner, while three per cent count their grandchildren as housemates.
Despite these financial pressures, around 49 per cent of those planning to retire this year still expect to be able to afford to leave an inheritance to their families, although fewer (37 per cent) believe their family actually expects to receive one.
Prudential’s research shows that those retiring in 2013 expect to receive average incomes of £15,300 a year. This is £3,400 lower than in the Class of 2008 study, when retirees anticipated annual incomes were £18,700 on average.
Vince Smith Hughes, retirement expert at Prudential, said: “With nearly half of those expecting to retire this year still providing financial support to their families, retirement income is increasingly becoming a family affair.
“Issues in the housing and jobs markets clearly make it financially difficult for adult children to leave home and most parents are happy to support them where possible. If they can afford the support there is no issue, but with expected retirement incomes at a five year low, any additional outgoings could cause financial strain.
“While supporting the family will always be a priority, it is important for people also to focus on their own comfort in retirement. Those who are planning to retire should consider consulting a financial adviser or retirement specialist, to assess the retirement income options that will best suit them and their family situation.”
Around 11 per cent of people retiring this year currently help out with family household bills, like energy or phone bills, while 10 per cent will give money to support their grandchildren’s upkeep. Nine per cent contribute towards other essential outgoings, like car insurance premiums or education costs, and six per cent even help with mortgage or rent payments.
People in London and Wales expecting to retire this year are the most likely to provide this support, with 52 per cent and 49 per cent respectively saying they support their families financially.
Prudential’s study also shows that 30 per cent of those retiring this year have families but currently do not provide them with any financial support, while 30 per cent do not have any dependants.