31% of those planning to retire this year are supporting their family financially with around £4,300 a year, new research from Prudential has revealed. Naturally this is putting pressure on their own retirement, which could have negative effects in the long run.
The most common recipients of pensioners' support are their children, with 56% of soon-to-be-retirees' children receiving some cash. This isn't the only generation who are getting some help though, as 25% of grandchildren are receiving support, as well as 8% of parents and even 2% of grandparents.
Considering this pressure to support multiple generations, it's important for those looking to retire this year to have a thorough handle on their own financial situation. While the average retiree expects to continue giving their family members £360 per month (or £4,320 per year, after tax), nearly one in five expect to provide more than £500 per month to their family. This is not a small sum when considering one's overall retirement income.
The money they offer is mostly reserved for help with everyday living costs, such as food and travel, according to 27%. Meanwhile, 23% say they're providing support with university fees and related living costs and 22% say some of the cash goes towards helping family members onto the property ladder.
"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 into retirement," said Stan Russell, retirement income expert at Prudential. "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 to cover their own living costs and don't put their retirement at risk."
It may be a bit too late for those looking to retire this year, but for the rest of us, Stan suggests we start saving early and seek professional advice in advance if you think you may need to support family members after retirement. While automatic enrolment
is helping everyone on its way, even the recently increased minimum contribution isn't likely to be enough for a comfortable retirement – let alone one that allows you to help others.
Making more than the minimum contribution is a good start, but it may also be a good idea to have a personal pension to contribute to, and don't forget about previous pensions that may be wasting away. Another option to save for retirement (or a first home) is the lifetime ISA, which comes with a Government bonus and can be opened by anyone between the ages of 18 and 39.
Those that are due to retire soon, or have already retired, needn't despair either. There's still the option of equity release to add some extra money to your retirement income and help others.
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