Retirees spending increasing amounts supporting their families

Pensioners are placing increasing pressure on their retirement plans and income by financially supporting up to three generations of their family, according to research from Prudential. 

The insurer’s annual Class of 2018 study, reveals 31 per cent of those planning to retire this year are spending an average of £4,300 a year supporting up to three people ranging from children, grandchildren and potentially even parents. 

More than half (56 per cent) say they give money to their children, while 25 per cent support their grandchildren and 8 per cent help their parents. Surprisingly, a small proportion (2 per cent) even gives their grandparents financial assistance. 

Prudential says the research highlights how retirement does not necessarily mean an end to supporting family, as those planning to stop work this year still expect to give their extended family an average of £360 a month, which equates to £4,320 a year after tax. 

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In addition, nearly one in five retirees estimates they provide more than £500 a month to family members, with 27 per cent stating the money is most commonly used to cover everyday living costs such as food and travel. 

However, 23 per cent say the money pays for university education fees and living costs while 22 per cent claim the cash goes to help their family get on the property ladder.

Meanwhile, the study shows women are slightly more generous than men, providing an average of £374 a month to family members, compared to £349 paid by men, although not all pensioners are willing to provide financial support. Figures show 26 per cent of those retiring in 2018 have families but currently do not provide them with any financial support, while 43 per cent do not have any dependants.

Stan Russell, retirement income expert at Prudential, says: ‘Increasing financial pressure faced by people of all ages, such as the cost of university education and the rising cost of buying a home, means that providing financial support to family members continues well in to retirement. 

 ’While it’s understandable so many people want to financially support family members, it is important to make sure they have enough money set aside themselves to cover their own living costs and don’t put their retirement at risk. 

‘Saving as much as possible as early as possible and seeking professional financial advice is crucial for those who don’t wish to risk feeling the pinch in their own finances.’

This article was originally written by our sister website Moneywise

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