How supporting loved ones in retirement could affect your wealth


Being newly retired is an exciting period in your life. You have worked hard, saved diligently, and are now able to reap the rewards of your years in the world of work.

However, despite your preparedness, you could be feeling stressed by the financial side of retirement. The cost of living crisis has seen UK inflation reach 9% in May 2022, meaning you might be concerned about how your pension will fare in the current economic climate.

Drawing a sustainable retirement income that can provide the lifestyle you want could be your number one goal at this crucial time in your life.

Lifestyle affordability in retirement could be a particularly pertinent issue if you are supporting your loved ones, as well as yourself, later in life. You’re happy to do it, but it could be a source of financial pressure, too.

Indeed, research published by MoneyAge has claimed that more than one-third of new retirees has financial dependents, the average cost of which is £3,700 a year.

If you have loved ones relying on you in retirement, especially adult children and elderly relatives, here’s how this could affect your wealth.

Supporting adult children in retirement

Many new retirees have children who are either approaching, or just starting, adulthood. Your children may still be financially dependent on you for:

It may feel wonderful to support your children and grandchildren in these ways, but in turn, having others depend on you financially could mean you have less of a safety net in retirement.

When it comes to your pension, drawing your funds sustainably and tax-efficiently is vital. According to FTAdviser, two-thirds of 2021’s retirees are at risk of running out of money.

Luckily, there are practical steps you can take with the help of your financial planner, to ensure you can support loved ones while maintaining your desired lifestyle in retirement.

Your planner can help you draw your pension tax-efficiently, and offer a review of your later-life income to ensure you are on track to draw your funds sustainably for the remainder of your life.

Providing for elderly relatives in retirement

Not only might you have children who need financial support as you enter retirement, but you could also have elderly relatives who rely on you, too.

According to Carers UK, 1 in 5 people aged between 50 and 64 (likely to be the “newly retired) are carers, with a further 1.3 million people over the age of 65 caring for another.

What this means is that you might need to factor in the cost of any care – even if it’s just travel or grocery shopping for a relative – into your financial plan. Your elderly relative may also end up living with you, which will likely have an effect on your own household expenses.

Additionally, some elderly people – even those with substantial savings in place – struggle to continue paying for their own care in old age. So, it could be that you are helping them shoulder these costs in retirement, potentially leading to some financial strain.

Indeed, private elderly care can be costly. Research published by Care Home in April 2022 claims the average weekly cost of living in a residential care home in the UK is £704, with nursing care costing around £888 a week.

At-home care can be less expensive than residential care. However, Age UK reports that, depending on the level of support your relatives need, you could spend an average of £15 an hour on at-home nursing care for loved ones.

Alternatively, you may decide to care for loved ones yourself, to keep costs down and remain close to them at this stage in their life. While it is surely a pleasure to care for those you hold dear, it can also be an emotional strain on the restful, relaxing retirement you had planned.

Plus, if you plan to travel or take time just for yourself, you may need to arrange additional care for your loved ones during these periods.

Your financial planner can help you prioritise your loved ones during retirement

Working with your financial planner could help you calculate how far you can afford to support your relatives when you are newly retired.

If you are already retired, your planner can listen to your goals and help you plan ahead, so you can sustainably cover these costs in the long term.

On the other hand, if you are approaching retirement, your planner can review your circumstances and help you prepare for these costs in advance, giving you valuable peace of mind when this transitionary period arrives.

By consulting a professional at this all-important time in your life, you could help maintain a sustainable retirement income and prevent yourself from depleting your pension pot too fast.

Get in touch

If you want to sustainably support those you love with the help of a friendly expert, get in touch. Email or call 0161 8080200.

Please note

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.

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