The average retiree gives £4,522 a year to relatives in gifts and for children’s education, even though concerns about their own finances remain high, new research suggests.
Retirees now spend one in every six pounds supporting younger generations, according to Quilter’s second annual Retirement Lifestyle Report, based on a survey of 5,002 UK retirees, with analysis from the Centre for Economics and Business Research.
Retirees in the UK spend a combined total of £368.7 billion a year, or £27,159 each – £5,000 more than last year.
Holidays remain retirees’ largest annual expense at £2,973, followed by home improvements of £2,776.
The report also reveals the average retiree now gives £2,272 a year to relatives and spends a further £2,250 on education costs for children and grandchildren. Despite this generosity, 60% of retirees are concerned about maintaining their current standard of living over the next year.
Almost two in five (39%) retirees say the current political environment is affecting their inheritance tax planning, with just 5% of those affected taking no action in response, down from 38% last year.
The research also revealed that 57% of retirees withdrew tax-free cash ahead of the government’s last budget, including 42% who said they did so in anticipation of rule changes. More than three in five (62%) of those that withdrew tax-free cash regretted doing so.
The planned inclusion of unused pension pots within estates for inheritance tax purposes from April 2027 is also prompting many to rethink their retirement strategy. More than a quarter (29%) plan to spend more of their pension savings during their lifetime, 26% intend to gift more of their pension wealth, and 24% expect to access their pension earlier than originally planned.
Steven Levin, CEO of Quilter, said: “Our research shows retirees are increasingly thinking beyond their own needs and planning for the people who matter most to them. Many retirees are choosing to help children and grandchildren through significant life events, whether that’s helping with education, getting onto the property ladder or navigating periods of financial pressure. The scale of that support shows the important role retirees continue to play, not just in their own households, but across the wider economy.”
Last week, research from Standard Life revealed parents using pension savings to cover the full cost of a child’s university education could have more than £100,000 less at retirement. The analysis revealed that a parent aged 55 who withdrew £90,000 from their pension – equivalent to the potential cost of a three-year university degree – could reach retirement with £119,000 less in their pension pot. For those covering the equivalent cost of studying in London, the potential retirement hit rises to £140,000.
