Pensioners funding family finances for three generations

A third of people preparing to retire this year are supporting family members with their finances, new research has revealed.

According to Prudential, one in three pensioners is spending an average of £4,300 to help their children and often also grandchildren.

In fact, the research found, they are likely to be supporting as many as three people with everyday living costs such as food and travel.

Stan Russell, retirement income expert at Prudential, said increasing financial pressure faced by people of all ages – such as the cost of university education and the high price of buying a home – were contributory factors to retirees supporting to their family members.

But he warned: “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 themselves to cover their own living costs and don’t put their retirement at risk.”

The findings formed part of Prudential’s Class of 2018 study, which looked into the financial plans and aspirations of people planning to retire in the year ahead.

It found that nearly one in five people expecting to retire this year estimated they would give more than £500 to family members monthly. The average being given to subsidise the family each month was £360.

While 27% of those giving money monthly did so to provide children or grandchildren with help to pay for everyday living costs, 23% said their financial support went towards university education and 22% were providing a property ladder boost.

Women tended to be slightly more generous than men, the study found, with females expecting to provide an average of £374 a month to family members. Men would hand over £25 less every month.

Stan Russell, added: “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.”

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