Parents call on kids to fund retirement
Published On 15 March 2007
British parents, struggling to keep their own debts under control, are turning to their children for help as they prepare for a comfortable retirement.The government has made pension planning one of its priorities and the Department for Work and Pensions has introduced a number of key measures to improve the existing system. Legislation has been backed up by a concerted effort to educate the general public, but new research suggests that millions of adults are failing miserably to address their financial concerns.
More than a quarter (27 per cent) of those surveyed by Yorkshire Bank indicated that they expect to rely on their affluent children in old age, with 40 per cent admitting that they have failed to make any notable savings.
Only 13 per cent of those questioned were found to be saving enough for a comfortable retirement and the 'Bank of Son and Daughter' is increasingly becoming the only other viable option.
Parents generally attribute their financial problems to the escalating costs associated with modern life, ranging from utility bills to petrol prices and expensive properties. Indeed, 60 per cent of those who are failing to save are patently aware that they are facing a difficult retirement, but they are often finding it impossible to escape their existing predicament.
Fighting against considerable debts, non-saving parents in the UK are fairly sure that they will not be able to retire at the age of 65. More than a third (36 per cent) of those questioned by Yorkshire Bank indicated that they will have to work well into their 70s in order to retire and 43 per cent are resigned to relying on nothing other than a state pension.
Gary Lumby, Yorkshire Bank's head of retail, said: "By not saving for the future, parents appear to be aware they're storing up hardship for themselves. Many are already presuming their children might be the answer to all their financial problems. However, the easiest solution is to start saving now."
Mr Lumby pointed out that individuals reaching their 30s should really invest a minimum of ten per cent of their salary into a retirement fund. Those concerned that they are not putting enough aside should also consider an ISA as a way to reduce the tax burden.
Worryingly, 16 per cent of respondents to the new survey indicated that they will need to inherit some money if they are to live comfortably during retirement. A sixth of those between the ages of 55 and 64 claim that they will need to downsize their home in order to raise the necessary finance.
Despite many intending to rely on their children in old age, many parents also concede that their children are finding financial planning equally tough.
A separate report from Yorkshire Bank has revealed that 23 per cent of parents believe that their children will be in their 30s before they can afford to move out, as house prices in the UK continue to rise.
Those struggling to clear their debts and raise a sufficient amount of money for retirement are advised to explore all options, with debt consolidation and individual voluntary arrangements just two of the strategies available.
