The FINANCIAL — One in three people would sacrifice at least 10% of their income to support their parents in retirement, research from Aviva reveals today. This is roughly double the amount that savers in the UK are currently investing in their company pension arrangements on average [5% of gross salary].
The study also shows that it is the younger generation who feel the greatest sense of financial responsibility to their parents, with all under-21s questioned prepared to give up a proportion of their income for older family generations, if they could afford to do so, according to the company.
However, while nearly two thirds of UK adults (64%) would be prepared to financially support parents and grandparents struggling to make ends meet, one in three (33%) are actually unable to, due to their own financial pressures.The under-21s are more likely to sacrifice a higher proportion of their income for their parents than any other age group, with nearly one in five (19%) stating they would donate more than a quarter of their income to help mum and dad cope.
Highlighting a gulf between those starting out in their working lives and those approaching retirement, over 40% of under-21s said they would sacrifice at least 10% of their income to help their parents, compared to fewer than 5% of 61-65 year-olds.
"However, younger people are the least happy to support retirees more generally through tax and national insurance contributions. Nearly half (44%) of under-21s believe the system of paying for state pensions is unfair as young people today have to pay more and will have more debt; while 34% believe the system is unfair as today’s workers won’t receive the same type of good deal when they come to retire," Aviva informed.
Unsurprisingly, the largest proportion of people of all ages who cannot afford to help their parents financially are those on the lowest wages: 50% of people earning up to £15,000, and 28% earning between £15001-25,000, cannot offer any support. Yet higher earners too don’t feel able to support struggling parents, with around 7% of people earning upwards of £85,000 claiming they cannot afford to sacrifice any of their earnings.
The research also reveals that the highest proportion of people (15%) who feel able to sacrifice more than a quarter of their income to their parents are those on more modest incomes between £35,000 and £45,000.
Although most people would be willing to help out if they could, significantly 18% of 61-65 year-olds don’t think it’s their responsibility to financially support their parents, perhaps indicative of the concerns this age group has about the cost of living and managing finances as they approach their own retirement years.
Clive Bolton, ‘at retirement’ director at Aviva comments: “There is quite a contradiction in younger people’s financial attitudes towards today’s retirees. They appear to be particularly generous towards their own families, but more reluctant to support the state as a whole.
“Interestingly, our research shows that family philanthropy is also generally higher amongst those on more modest incomes. And those who earn more or who have their own retirement in their sights are less able or willing to help out as they struggle with their own finances.
“We know from Aviva’s Real Retirement Report series that many over 55s are struggling to clear long-term debts(2) before retirement and that that there is a significant pensions gap in the UK(3). In this period of change, as we work towards a more sustainable way of funding retirement, any solution needs to make sense to all generations – not just those approaching retirement – in order for it to be perceived as fair and to get the support it requires.”