A third of planned retirees still financially supporting family

One in three people who plan to retire in 2017 are still contributing financially to the support of other family members, putting extra pressure on their retirement incomes.

New (KOSDAQ: 160550.KQ - news) research from insurance company Prudential (SES: K6S.SI - news) shows that those dependent on would-be retirees are most often their children (45%), but almost a quarter of people are supplementing their grandchildren's income.

Nine percent of those who admitted to giving money to family members are supporting their parents, while 5% are helping to support grandparents.

The financial contributions average out at £260 a month, which would represent a significant squeeze on retirement incomes at a time when inflation is rising and interest rates remain low.

Kirsty Anderson, a retirement income expert at Prudential, said that increasing life expectancies meant that pension pots now have to go further than they would have in previous generations.

"However, for those providing financial support to their dependants it is likely to cost them an average of £62,000 over the course of their retirement - accounting for a significant proportion of their pension pot and impacting the income they can expect to live on," she said.

On average, those who said they provide financial support to loved ones said they were helping more than four people.

The most common reason their help was needed was to cover everyday living costs, but 7% of would-be retirees say they are contributing towards housing costs.

A similar number of people are financially supporting relatives in long-term care, reinforcing the difficulties families face to pay for social care bills amid an ageing population.