2 in 5 retirees support their families financially

2 in 5 retirees support their families financially

Two in five people retiring this year provide financial support to their families which may be at risk as their incomes drop, according to new research from Prudential.

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% 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% say they provide money regularly to cover items such as food or travel, while 14% 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%) of those planning to retire this year will have no dependants living with them.

Almost a sixth (16%) of this year's retirees have children under the age of 25 living at home, while 13% have children aged 25 and over still living with them. Around 4% even share their homes with a child's partner, while 3% count their grandchildren as housemates.

Despite these financial pressures, around 49% of those planning to retire this year still expect to be able to afford to leave an inheritance to their families, although fewer (37%) 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 £3400 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% of people retiring this year currently help out with family household bills, like energy or phone bills, while 10% will give money to support their grandchildren's upkeep. 9% 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% and 49% respectively saying they support their families financially.

Prudential's study also shows that 30% of those retiring this year have families but currently do not provide them with any financial support, while 30% do not have any dependants.

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George Bailey