Britain’s pension crisis is set to escalate, a new study warns today, with a generation of adults – facing the triple pressure of the financial ‘hat trick’ scenario of supporting both their parents and their own children, whilst having no financial plans to safeguard their own future either.
The Norwich Union study reveals one in three Brits most dread the possibility of simultaneously financing both their children and their parents.
A further 59% of over 50s admit their pensions and savings are unlikely to see them through retirement – leading 51% of adult children to fear the knock on effect on their own financial futures.
28% adult children are ready to cash in their savings and investments to fund their parents’ retirement, while others consider taking their parents to live with them and 21% would change their own lifestyles to find extra money.
“Talk of the so-called ‘savings gap’ is nothing new- but this study is an urgent reminder of the very real impact this issue could have on the next generation of retirees. What makes it all the more alarming however is that, while adult children told us they fear supporting their own parents, an incredible two thirds admitted they have no financial plans for their own retirement,” says Scott Brown, Norwich Union spokesperson.
43% of adult children suspect their parents might struggle financially in retirement and are concerned that the impact on their own lives will see them losing their own savings; having to work longer than they had planned; not being able to send their children to university; and having to radically downsize their own lifestyles.
But they refuse to broach the issue with their parents. Almost half have no idea how their parents plan to fund their retirement – and 61% say they could not imagine talking to their parents about their finances.
Norwich Union has created a five-point plan to help families talk about financial planning:
1) Communicate. Get a grip on your family’s financial situation and get your head out of the sand today. Ignoring the problem won’t make it go away; it will just make it worse. It can be difficult to talk about money, especially with loved ones, but by being open and honest now you can help to avoid the burden of debt and stress later in life.
2) Remember you are not alone. Everyone needs to plan for their retirement, no matter what their age. People are living longer and healthier lives, so it’s even more important to think about how and when you and your family can save for retirement.
3) Plan ahead. With a bit of planning, you can do a lot to help your family get ready for retirement. Fairly small changes now can make a big difference to your family’s lives in the future – and you don’t need to blow your monthly budget.
4) Money saving options. Pensions can be confusing and many people don’t know where to begin, especially when there are so many other things to spend your money on. But the truth is that a pension is one of the most effective ways to invest for your retirement because you can get tax relief on the money you save in a pension scheme. If you’re a parent don’t be afraid to sit down and talk through your pension plans with your children, that way they will know what to expect and you’ll avoid any surprises later in life.
5) Ask the experts. There are lots of organsations out there who can help. Don’t struggle on your own, as a family you should collectively seek professional advice.