Over-55s throw a lifeline to families drowning in sea of bills
Aviva's latest Real Retirement Report has discovered that the UK's over-55s are choosing to spend a significant amount of their retirement income on supporting their loved ones financially.
Just under half (41%) of the UK's over-55s have provided financial assistance to their families and close friends in the last year, with the typical amount provided totalling 9% of average annual income (£1,430).
Most likely to have received financial help were adult children (23%) and grandchildren (13%). People who are typically ‘retiring' (aged 65-74) are the most likely to have helped their adult children in the last year (28%). Significantly, 20% of the long-term retired (over 75) have given financial assistance to their children in the last year, despite the fact they are most likely to be surviving on a fixed/limited income themselves.
The main reason for over-55s to provide financial help was to help pay off debts/bills (31%), followed by one-off costs (17%), or topping up income (17%).
The UK's over-55s are not just providing financial help to their children and grandchildren, as 4% of over-55s said they had helped pay for care costs/support for their own ageing parents in addition to providing a financial top-up (2%) to their income. While a smaller percentage of over-55s have provided financial assistance to their parents, the average amount provided is higher, with pre-retirees (55-64) providing an average of £3,280 per year.
The cost implications:
The impact of providing this financial support for those moving towards retirement or on a fixed income is significant, and 75% of those over-55s who had provided assistance said it had impacted on their financial planning. More than a third (37%) of over-55s said it has resulted in them dipping into their capital and they now have less in savings/investments than before, and almost a quarter (23%) found they had less to spend on day-to-day expenses.
It is not just direct financial support that over-55s have been providing though, as the Real Retirement Report found 46% of over-55s provided some form of non-financial help in the last year. Typical non-financial assistance included: helping out with transport needs (41%), providing general help around the home such as odd jobs (35%) and providing childcare (34%).
However, even non-financial support has a cost and 6% of over-55s said the provision of support (both financial and non-financial) had meant they had had to delay retiring, 4% that they had retired early to look after older family members, and 2% re-entering the workplace part-time to generate/replace lost income.
Clive Bolton, 'at-retirement' director at Aviva
"Every age group has come under financial pressure as a result of the current economic situation, but the over-55s have their own unique pressures. Traditionally, this is when they are finalising their retirement plans or surviving on a fixed income, and so unplanned costs and supporting others can have a significant impact on their future standard of living.
"As such, people need to plan for the unexpected when they are thinking about their retirement income. Life rarely goes as planned and so it is vital people budget for extra costs such as helping out their adult children or parents financially, or even what they will do if they or their partner are unable to work for as long as they had planned. Building up a contingency fund will mean they can protect valuable retirement capital as this will need to last them their lifetime."