Forget the Bank of Mum and Dad – nearly one in six parents worry they will have to turn to their children for financial support in retirement, research from MetLife shows.
MetLife’s nationwide study found 16% of over-40s with children are concerned that they will need to ask children for financial support as they will not have saved enough for a comfortable retirement by the time they stop work.
Instead of bailing out their children they worry they will have to rely on them for financial support.
One of the major challenges facing retirement savers identified by the research is that nearly half (45%) worry about the financial risks they have to take to guarantee an income for life when they stop work. Around three-quarters (75%) say having a guaranteed level of income in retirement is important to them.
The research found more than half (56%) of over-40s retirement savers believe they are on track with their retirement savings rising to more than three-quarters (76%) among the over-55s.
But 30% of over-40s admit they are behind on their retirement saving and even among the over-55s, who are the first generation to benefit from pension freedoms, around 16% admit they have not saved enough yet.
They are being squeezed by a combination of low long-term interest rates and ongoing investment market volatility as well as narrowing choices on retirement income.
MetLife is supporting moves to ensure savers understand the choices available to them and has launched a campaign to deliver Real Pension Freedom supported by advisers, with a focus on the valuable role guarantees can play in retirement.
Simon Massey, Wealth Management Director at MetLife UK said: “Parents will have worked hard to support their children so perhaps they should feel entitled to rely on them if they need financial support in retirement.
“However, it is a bit of a role reversal when it’s retired parents banking on their children for money. It will also have an impact on how much the children can save for their own retirement which in turn can cause problems.
“Planning for the long-term and reducing the risk of running out of money in retirement is one of the key challenges for savers. Guarantees can help people approach their retirement with greater certainty and confidence and a Guaranteed Drawdown solution provides the peace of mind that comes with a guaranteed level of income for life in retirement while retaining full access to your money. This can help mitigate the risk of needing to call on children’s help”
MetLife’s study shows just over half of couples (52%) have discussed their retirement plans and how they are going to achieve their retirement saving targets. Around 45% of over-40s couples admit they have never discussed retirement planning.
MetLife’s range of retirement and investment solutions has been designed to meet the need for a guaranteed level of income for life in retirement or a guaranteed capital amount at the end of a chosen term, with flexibility.
MetLife’s Retirement Portfolio, which was designed for pension freedoms, and its stocks and shares ISA Portfolio provide a choice of income and capital guarantees.
Customers can choose from a range of investments to build a personalised plan suited to the levels of risk they are willing to take, while having the choice of a valuable guaranteed level of income for life from age 55 or a guaranteed capital sum at the end of their chosen term.
In addition, the plans offer the potential for customers to increase the value of their guaranteed benefits daily, while enabling savers to start, stop and restart their income to suit their personal needs.