A new study has revealed that a third of those looking to retire in 2020 are currently financially supporting their family. The research, carried out by specialist advisor, Key, highlights the potential financial worries retirees might face.
So, how much are those looking to retire currently giving to their families? Below, we will discuss the recent findings and what you should think about if you are planning on retiring in 2020.
How much do the over 65’s give to family?
According to the recent study, the average handouts given to family by the over 65’s is £3,700 a year. Approximately 34% of those looking to retire this year currently provide financial support to relatives. The study included 1000 people and it focused on retirement planning and financial security.
The average retiree will receive an income of £20,663 a year. Around 18% of those questioned said they planned to spend a fifth of their income to help family members. However, 15% were slightly more generous, giving family an average of £500 or more per month.
What are the reasons for providing financial support?
There are a lot of reasons the over 65’s provides financial support to loved ones. It is significantly harder to afford the cost of living today, with many children forced to live with their parents for financial purposes. Many of the respondents to the recent study stated they allow their relatives to live with them rent free.
Other reasons they might need to financially contribute include:
- Helping with everyday living costs (24%)
- To cover household bills (20%)
- Help with non-essential purchases such as holidays (19%)
- Help with payment towards a property – (18%)
- Funding for grandchildren – (15%)
- University fees – (13%)
These are just some of the reasons the over 65’s support their family financially.
Things to consider
What those looking to retire need to think about is whether they can realistically afford to keep making generous contributions to family. For many, the average £20,663 income a year is a lot less than they are used to. This means they could land themselves in financial difficulty if they continue to provide regular payments.
One option available is equity release. Helping you to free up the value in your home, it can provide you with a lump sum to help support loved ones. Just make sure you invest in equity release advice before deciding if it’s the right option for you.
Speaking of the recent findings, CEO of KEY, Will Hale, states:
“It is important that families have open discussions about their finances. Many younger people would be horrified if they knew older members of the family were struggling due to their generous natures. Taking the time to speak to a specialist advisor is a sensible step to look across all your assets and understand how much support you can provide”