Annuities insufficient; children help out
Organising your pension annuity at retirement may simply not be enough. Annuity income, combined with the State pension, is not providing sufficient income in retirement for many. So, what’s happening?
The answer: nearly a tenth of British adults are stepping in to help their parents fund retirement, as the cost of living increases alongside life expectancy. Inflation, demand for places at care homes and the growing elderly population mean that the costs of long-term care for the elderly are set to rise.
According to new research, people are also finding they need to step in financially to help their parents with day-to-day expenses or expensive care. Many people are also taking their parents into their homes to look after them, in order to avoid the expense of paying for care homes or part-time care.
The research from Engage, the mutual insurer, showed that a quarter of Britons with parents over the age of 65 are concerned about how the family will cover the costs of their parents’ retirement, or that their inheritance will be squandered to pay for their care.
A poll of financial advisers by Citywire recently showed that the cost to individuals of providing residential care is likely to be a whopping £30,000 to £40,000 a year. Meanwhile those who are cared for in their own homes face costs of between £20,000 and £40,000 a year depending on their individual needs.
Karl Elliott, a spokesperson for Engage, said: ‘With the size of Britain’s retired population growing, and costs of living increasing, it is important that people save little and often towards their retirement in order to reduce the pressure on themselves and their family to make ends meet in old age.’
