Nearly a third (31 per cent) of those planning to retire this year are helping out their families financially to the tune of around £4,300 a year, research from Prudential revealed.
The provider - which polled 9.896 non-retired UK adults aged 45 plus, including 1,000 who are planning to retire in 2018 – found out that these pensioners are, on average, providing financial support to three people.
The majority (56 per cent) were supporting their or their partner's children, followed by those who were helping their grandchildren (25 per cent).
In some cases, pensioners were even supporting their parents (8 per cent) and grandparents (2 per cent).
Taking all monthly payments into account, those planning to stop work this year expect to give their extended family £360 a month on average, adding up to £4,320 after tax a year.
Nearly one in five expecting to retire this year estimate they provide more than £500 a month to family members.
The money is most commonly used to cover everyday living costs such as food and travel, according to 27 per cent of those who give money monthly.
However, 23 per cent said they were providing financial support to help with university education fees and living costs, while 22 per cent said some of the cash goes to help jump on the property ladder.
According to Stan Russel, retirement income expert at Prudential, while it is 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.
He said: "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 by helping out family members."
Several financial advisers have clients who are supporting their families.
Paul Gibson, managing director of Granite Financial Planning, said he always builds a "robust financial plan and cashflow model" to help to show to these savers whether this assistance is affordable both now and into the future.
He said: "We also encourage clients to maintain appropriate records if gifts are made from income to ensure they are inheritance tax friendly."
On the other hand, Gem Durham, independent financial adviser at Obsidian, argued that this reality doesn't represent the majority of her clients.
She said: "I have only a few clients providing support and only one giving a monthly income to support a son through his masters, the others give lump sums to assist with property purchase and pay for weddings.
"Clearly the cost of housing is a big factor in this – trying to save for a deposit whilst also paying high rents is an impossibility for most young people."
According to Alan Chan, director and chartered financial planner at London-based IFS Wealth & Pensions, not everyone in this situation will need financial advice or planning from a professional.
He said: "Sometimes it could just easily be funded out of their pension income and have little effect on their own retirement lifestyle.
"But for others it may be a case of investing a sum of money in order to generate this extra income and this is more of the kind of area we would assist with."
Mr Chan argued that often this is "usually done as part of wider estate planning, particularly around inheritance tax mitigation".
He said: "Regarding university fees, we would usually help parents or grandparents plan for this some years in advance, and help them set aside a regular or lump sum investment plan and manage the funds to ensure they are on track when they do eventually need the money to pay for the fees."
For William Burrows, retirement director at Better Retirement, it isn't necessarily a problem that more people are sandwiched between supporting their children through education and supporting their parents through old age, providing they are in good wealth and have an enjoyable job.
He said: "The problem is with those who are less fortunate and do not have the money to support their family. One of the unintended consequences will be a growing divide between families that can support the young and old and those who cannot."
maria.espadinha@ft.com
