Family commitments eat into retirement incomes

Data from Prudential’s Class of 2014 study revealed that 39 per cent of people retiring this year were providing an average of £3000 a year to family members, with at least half of the dependants aged under 25 years old.

The yearly study surveyed 7821 UK non-retired adults, including 1010 planning to retire in 2014.

It also found that 28 per cent of those planning to retire did not provide any financial support, while the remaining 33 per cent had no dependants.

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Of those who were funding family members, some 9 per cent were contributing to the upkeep of their grandchildren, while 7 per cent were helping to cover the cost of essential outgoings, such as car insurance or education.

A further 7 per cent were contributing towards general household bills, with 7 per cent helping to pay university costs.

Men planning to retire provided their families with more money than women, with men giving away £290 a month on average, compared with £220 for women, a difference of £840 a year.

However, despite these outgoings, some 30 per cent of respondents still believed they could afford to leave an inheritance averaging £180,000, although 24 per cent said they would not be able to afford anything at all.

Key statistics

39% - proportion of people planning to retire this year who will provide financial support to dependants in retirement.

£3000 - yearly average support to dependants.

Adviser view

Mike Pendergast, IFA at Cheshire-based Zen Financial Services, said: “I have had clients who are grandparents and have financially helped their children or grandchildren. It tends to be on an ad-hoc basis, but I do take it into account when doing a client assessment. The key is advising the client to save enough so they can afford to do it.”