With thousands of this year’s retirees still giving financial support to their children, how do they feel about acting as bank of mum and dad?
Two in five people planning on retiring this year are still required to regularly hand out money to family members or other dependants, according to pension provider Prudential.
Those who provide regular support shell out £250 per month on average, or £3,000 over the course of a year.
Helping out with everyday living expenses is the most common cost – in total 14% help their dependants with expenses such as food or travel.
One in 10 gives hand-outs for holidays and TVs
Paying university fees, splitting household bills and outgoings such as car insurance, as well as helping with raising grandchildren are other typical expenses.
However, the study shows 11% hand over money for luxury items such as holidays, new cars or TVs.
Perhaps unsurprisingly it’s the children of retirees who are most likely to benefit from regular hand-outs.
However, grandchildren are also on the receiving end too: at least half of those dependants who are being supported are family members aged 25 or under.
‘I might as well give money now’
Sally, who lives near Edinburgh, is in her early 60s and is retired.
She has given money to each of her three adult children - all in their 30s - to help them buy a house and support other essential living costs.
"When I pop my clogs my children will get my money anyway so I might as well give it now," she says.
"Although I will only give out money to help my children cover essential costs.
"I definitely wouldn’t hand out money for luxury items such as holidays or TVs."
'I want to give my grandchildren a good start'
Sally says one of the main reasons she gives money is to aid her grandchildren.
"I want to make sure my grandchildren get a good start in life," she adds.
The handouts are given as gifts and on an informal basis.
"Although," admits Sally, "If I get requests for money I will write the sums down as proof in case one of my other children thinks I’ve been unfair."
What do other retirees think?
We asked several other retirees about giving money to help out their family members.
Here’s what they had to say:
- "The help stops when one generation levels with another in terms of lifestyle. I would be mortified to ask for financial help from a parent if they were a pensioner and struggling and I wanted a new TV! Fortunately my children appear to feel the same way."
- "I see no point in having money in the bank getting little interest when it can help one or other of our sons."
- "I help out with extras like shoes, clubs and school uniforms. I take my grandson on holiday a couple of times a year - he is five now so last half-term we went to Centre Parcs, when he was a toddler we did Butlins. My daughter never asks but money is very tight for her. I am fortunate enough to be able to afford to be generous."
- "I think I'm extremely lucky to be in a position to help out. I've always helped out when necessary, and would never see them in dire straits. My daughter was paying a lot of interest on her credit card, so I paid it off and she pays me back, interest free."
- "If my kids need financial help I will help them by lending them money but I insist they pay it back by so much each month....but I draw the line at luxuries i.e. holidays new TV etc. I think it stems from my dad as he helped me when I first got married."
- "We are a working-class family who do not have a lot to give (so no significant sums of money) but we all have a 'help each other' attitude that continues no matter what the age."
- "I lend my children money, interest-free, but put it on a formal basis and lay out the terms of repayment. To my thinking I'd rather do that that have them pay interest to banks."
‘People risking own standard of living’
So it seems many retirees still like to help family members when they can, but not everyone is in such a fortunate position.
And even those that are need to be careful not to over-commit themselves financially, according to Stan Russell, retirement income expert at Prudential.
"Increasingly we’re seeing retirement incomes being stretched in ways that wouldn’t have seemed likely a generation ago," he says.
"Giving a financial helping hand to family is very important, but people retiring this year are risking their own standard of living with the levels of support they provide."
Newly retired overspending by £6,500 a year
The warning comes as retirement specialist LV= says many newly retired people are under-budgeting for their first five years out of work and overspending by an average of £6,500 a year.
The company says that "non-essential" spending by the average new retiree - aged 65 to 70 - will hit nearly £33,000 in this five-year period.
This is nearly £900 more annually than the state pension, which is currently £5,727.80.
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