Supporting family members after retirement
Research from Prudential has found that nearly 40% of those who are planning to retire this year will also be supporting family members or other dependants.
These future pensioners are most likely to be supporting children or grandchildren, with the most common reason for support being everyday living costs such as food or travel. The average retiree will be supporting two people, although this varies by region. For example, in the West Midlands, the average number of people supported is closer to four, whereas in Scotland it is 1.5.
The average payment is £250 a month, which equates to £3,000 a year.
If you think that you will need to provide financial support to your dependants even after you have retired, it is a good idea to check that your pension arrangements will be enough to meet your needs.
Do you know how much state pension you will get? A full basic state pension is currently £110.15 a week (£5,727.80 a year), rising to £113.10 a week (£5,881.20) in April 2014. This is the rate if you have paid (or been credited with) 30 years of national insurance contributions. If you are not sure, you could get an estimate using this link.
Or you could get your grandchildren off to a good start by giving them their own pension pot. They'll get tax relief added to it at the basic rate, but this won't affect your own tax bill. If they've got no income, you can pay in up to £2,880 a year - which becomes £3,600 with tax relief. The longer the money is invested, the more time it has to grow.
If you are under state pension age and look after grandchildren aged under 12 on a regular basis, you could qualify for class 3 national insurance credits- which can be used to top up your income in retirement. Working parents can give up the child benefit credits they receive and donate them to their child's grandparents or other adult family members for the previous tax year. Grandparents and parents must apply for the credits to be transferred. Read more about this here.
Our mission is to make pensions accessible to everyone, so if there is anything you do not understand, please contact us and we will be pleased to help. . To discuss any pension-related issue: