20th February 2012

Nearly one in four pensioners have had to bail out children

Nearly one in four pensioners have had to bail out their children* at a major cost to their own standard of living, new research from MetLife shows.

Providing financial support for children ranked almost equally with poorly performing investments as the biggest unbudgeted financial shock for retired people, the nationwide study shows. Around 23% of pensioners said they had helped out adult children while 25% said they had been caught out by poorly performing investment plans.

The research showed nearly six out of 10 pensioners have been confronted with unexpected financial shocks in the past two years which blew their retirement plans off course, with major home repairs and buying a new car each being reported by 16% of those surveyed.

MetLife is urging people planning for retirement to focus on the risk of financial shocks hitting their living standards – and to consider solutions which allow them to keep control of their retirement income, such as fixed-term annuities.

Its research shows 51% of pensioners say they’ve had to run down savings and investments in the past two years to supplement retirement income, with 36% eating into savings and 12% using up both savings and investments.

Dominic Grinstead, Managing Director UK at MetLife Europe Limited said: “If you are on a fixed income the effect of an unbudgeted financial shock such as bailing out adult children is magnified.

“It is clear that retired people have to expect the unexpected as nearly six out of ten have had to cope with unbudgeted bills and other issues which need to be dealt with.

“Pensioners literally have to live with the decisions they make on retirement income, so they may benefit from more flexible retirement income solutions which enable them to stay in control over their retirement.”

Around one in twenty retired people have even had family members coming to live with them because of financial hardship. Meanwhile, 2% of retired people have had to find money to pay for major medical treatment.

MetLife’s Freedom Income Plan fixed-term annuity enables clients to transfer to another retirement product during their selected term should they become ill and qualify for enhanced terms on a lifetime annuity, or if the dependant attached to the plan should die.

They can choose either a level income or an incremental annual rise of up to 8.5% with the certainty of a known fixed income plus a guaranteed maturity amount at the end of the selected term.

Minimum investments in MetLife’s Freedom Income Plan are £20,000 after taking a pension commencement lump sum, with a choice of terms running from three to twenty-five years. It can accept payments from Registered Pension Schemes and Recognised Overseas Pension Schemes. Protected Rights and Pension Credits can also be paid in.

* Research conducted by Vision Critical using an online methodology among 977 retired adults between October 24^th and 27^th 2011

Retirement, Pensions