Retired parents expected to finance struggling adult children
23/08/2010
Today’s pre-retirees face increasing financial pressure from their adult children, according to new research from Aviva. Although work and wages have come to an end, the bank of Mum and Dad is expected to stay open.
The research reveals:
• 18% of parents set to retire anticipate adult children will need future financial help
• This evokes negative feelings amongst half (50%) of retiring parents
• 40% of retiring parents have never discussed future plans with adult children
Parents approaching retirement face greater financial pressure as their
grown up children expect ongoing handouts. Although this will come as no surprise for nearly one in five (18%) parents, it still evokes negative feelings amongst half of those calling time on work.
Half (50%) of parents who plan to support their offspring feel worry, concern or anger at the thought of helping out their adult children when retired. Twenty nine percent of parents worry that further handouts will limit their retirement income and 16% are concerned they will have to continue working as a result.
Of those who expect to give financial support, the majority of funds will be spent on a house deposit. Nearly two thirds (62%) of parents anticipate helping their children to buy a home and almost half (44%) of children are expecting it. Grandchildren are the second most popular reason with 47% of parents expecting to help fund the next generation and nearly a third (30%) of adult children relying on it.
Despite this, discussing retirement finances remains a taboo topic for a lot of families with 40% of parents set to retire without broaching the subject with their children. Yet three quarters (76%) of parents would like to discuss pension plans with their offspring and 45% would use it as an opportunity to understand joint concerns and expectations. Over half (53%) of adult children want to talk to their parents about pensions; with a quarter (25%) saying it would help them understand their own concerns.
The lack of discussion on this subject could explain the alarming number of adult children who have little knowledge of products they will require themselves one day. One in five adult children (20%) admit to knowing nothing about pension planning, and an alarming 70% do not know what an annuity is.
Clive Bolton, ‘at retirement’ director for Aviva said: “The financial landscape and the pressures on the modern family have massively changed over the last decade, as has the profile of a ‘typical’ retiree. Rather than inheriting from their parents, our research suggests many adult children now expect financial help from their parents at a time of life when they may struggle to give it. By discussing plans sooner rather than later, families can avoid confusion and disappointment later on.”
Aviva offers an online Retirement Income Calculator to provide people with a quote for a pension annuity. It also offers helpful information for people who may discover their pension pot is smaller than expected. To find out more visit the website linked below.