Financial advisers have reported that more than half of their clients (55%) are currently more worried about their adult children’s financial predicament than their own.
This is according to new research published by Royal London, which surveyed 218 financial advisers at the beginning of March.
The mutual life and pensions provider found that while around half (53%) of advisers reported that clients are making adjustments to their finances as a result of cost of living increases, one of the main requests for a quarter (25%) of advisers was from clients who want to release funds to help their adult children cope with the rising cost of living.
Royal London’s study revealed that the top request, in the context of the rising cost of living, was to help make sure investments kept up with inflation, as cited by two in five advisers (40%).
In terms of accessing additional money, over half (55%) have clients who are tapping into their pension savings to boost their disposable income, with 36% increasing the amount of drawdown cash they took, 33% taking an additional lump sum for themselves and 18% taking a lump sum specifically to help their children.
Pensions expert at Royal London, Clare Moffat, said that the cost of living crisis means many adult children are relying on “a financial leg up” from their parents to cope with rising costs.
“While it’s tempting to use retirement cash to help family, it should come with a note of caution,” Moffat warned. “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 future.”
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