More than half (55%) of advisers say clients are more worried about their family’s financial predicament than their own, according to research from Royal London.
While around half (53%) of advisers report that clients are making adjustments to their finances in response to the cost of living crisis, a quarter (25%) of requests came from clients who want to release funds to help their adult children cope with higher costs.
Royal London said the top request from clients to cope with the rising cost of living was to help make sure investments kept up with inflation.
More than half of advisers (55%) said they have clients who are tapping into their pension savings to boost their disposable income with around a third increasing the amount of drawdown cash they took, while 33% took an additional lump sum specifically to help their children.
Clare Moffat, pensions expert at Royal London, said the cost-of-living crisis has resulted in adult children becoming reliant upon their parents to help ease the financial squeeze.
Moffat said: “While it’s tempting to use retirement cash to help family, it should come with a note of caution. There’s a real danger that it will compromise parents’ long term retirement security and impact their overall retirement – ultimately spending more now will mean spending less later.
“For today’s young adults, life long-term financial planning looks very different to the journey their parents took. Reaching key financial milestones, like buying a house, involves a much longer wait than previous generations. While it’s natural for parents to help, the right balance needs to be struck. Dipping into your pension pot and withdrawing funds early can have a dramatic impact on your overall retirement. It can also make it harder to build a pension pot back up in the future.”
[Main image: ekaterina-shakharova-L4nwL3195U0-unsplash]
