Parents beware when dipping into savings
As the cost-of-living crisis squeezes budgets, some people could be risking leaving themselves with a shortfall in retirement – as they dip into savings to help support their families, new research suggests.
Nearly a quarter of parents (24%) have already accessed, or are planning to use retirement funds early to help deal with rising living costs, according to research from financial services company Killik & Co.
One in 12 parents say they’ve already dipped into savings for later life to support their children – a decision that could leave a funding black hole in retirement.
Two-fifths of parents say the cost-of-living crisis is worse than they expected, with energy bills causing most concern, followed by food bills, fuel, housing costs and education, including private school fees. The research also found a third of parents are concerned about the ability of their children and grandchildren to cope with higher costs, and 22% have changed plans to transfer wealth as a result.
Will Stevens, right, head of financial planning at Killik & Co, says “many families are making tough financial choices, including using long-term savings to make up for shortfalls in their own budgets and those of their children”.
“Some parents will have no choice but to access these savings early or reduce contributions, significantly impacting the lifestyle they can fund in the future,” he adds.
Will suggests it’s a good idea to think carefully about any major financial decisions.
“Accessing or making changes to your pension is a major financial decision, so it’s important to seek expert advice, if at all possible. A good financial planner can provide clarity and advise on the best steps to take if circumstances change, for better longer-term outcomes,” he says.
Households can check they are getting all the financial support they are entitled to at helpforhouseholds.campaign.gov.uk