More than a million pensioners have to rely on friends and family to help them financially, according to a new report.
The LV=’s State of Retirement study reveals one in ten pensioners are reliant on friends and family for financial assistance. The research also found that the number is set to rise with 27% of those due to retire in the next decade likely to need financial help from others to get by.
“A significant minority of pensioners rely on loved ones to help them financially during retirement and those approaching retirement seem to be in an even worse situation,” says John Perks, managing director of retirement solutions at LV=.
The report breaks down pensioners into nine financial situations. The biggest group is the 43% of over 65s who are classed as ‘State Pensioners’. This is where the State Pension provides the majority of retirement income, often supplemented by small personal pensions. LV= report that this group are the most likely to worry about having enough money and take on part-time jobs to help their finances.
The groups break down as follows:
|
Category |
Number |
Future change |
Characteristics |
|
State Pensioners |
43% |
Likely to decrease |
State Pension provides majority of income, often supplemented by personal pensions. |
|
Defined and Refined |
24% |
Likely to decrease |
Retired on a healthy defined benefit pension, giving them a fixed income for life and allowing them to have a high standard of living. |
|
Falling Short |
24% |
Likely to increase |
Retirees who are worried that their savings and/or pension won’t last their full retirement or allow them a comfortable lifestyle. |
|
Property Pensioners |
22% |
Likely to increase |
These over 65s rely on some value from their property to fund their retirement through downsizing, relocating or equity release. |
|
Overwhelmed |
19% |
Future change unclear |
Those confused by all the retirement income options available. |
|
Reliant on Others |
11% |
Likely to increase |
Pensioners who are reliant to some degree on friends and family for financial assistance. |
|
Pension Investors |
9% |
Likely to decrease |
Having left work, these retirees use some of their free time to make active decisions about their pension resources and reinvest to continue to grow their reserves. |
|
Grey-Collar Workers |
8% |
Likely to increase |
This is the group who carry on working after 65, 87% continue to work because they want to rather than due to necessity. |
|
Second Homeowners |
7% |
Future change unclear |
People who have second properties either as an investment or means of income, allowing them to live comfortably in retirement. |
Is there value in family advice?
The research by LV= has also found that a growing number of people in or approaching retirement turn to friends and family for financial advice rather than professionals.
Of existing pensioners 60% have taken financial advice from their nearest and dearest, while 72% of those approaching retirement plan to do the same.
“[It is] worrying that people are far more likely to take financial advice about retirement from friends than from a professional,” says Perks. “Given the increasingly complex choices consumers have to face about their pensions, and with the economic impact of leaving the European Union still unknown, we believe it’s never been more important consumers have access to professional advice at retirement.”
Despite recent pension reforms vastly increasing the choices available to people when it comes to accessing, and drawing an income from, their pension pots only a quarter of over 50s have taken, or plan to take, professional advice.
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