Article date: 24 June 2009
Ageing population putting increasing pressure on family finances
As the Department of Health prepares to publish its green paper on long-term social care funding this month, research reveals a potentially difficult financial future for Britain’s ageing population.
The Aviva Cost of Family Care study says six in 10 (62%)* over 50s worry that their pensions and savings are unlikely to see them through retirement.
The knock-on effect is creating a new generation of "baby gloomers" – those facing the prospect of simultaneously financing both their elderly parents and their own children:
- Almost three quarters (71%) of adults in the UK fear their parents’ shortage in retirement funding could cause severe problems for their own financial futures
- Six in 10 (60%) are concerned their parents will not be able to afford to stay in their existing homes in retirement – a quarter (25%) plan for their parents to live with them
- One in 10 (11%) say they are ready to cash in their savings and investments to fund their parents’ retirement
- Almost 10% are worried that their parents might not be able to pay for any required medical care during retirement.
Many would like to support their elderly parents financially during retirement but, for two thirds (67%) say their own financial situation makes that impossible.
In fact almost half (43%) are delaying financial plans for their own retirement because of the current economic climate.
Paul Goodwin, head of pension propositions for UK Life, Aviva comments: “Future finances are one of the most crucial areas families need to discuss and a key area where people should seek independent financial advice. Almost half (45%) of adults told us they have no idea how their parents plan to fund their retirement, but six in ten (62%) admitted they feel uncomfortable asking their parents questions about their finances.
“According to our research the majority (93%)** of ‘baby gloomers’ would welcome a more consistent system for care of the elderly. The Green Paper is therefore a great opportunity to improve care, making it clearer for families what they are entitled to and where they should turn for advice and support."
The 2009 "Cost of Family Care" study by Aviva also found:
- 41% worry they will have to work longer than they planned to support elderly parents
- 25% worry that they will not be able to support their own children through university
- 37% worry that they will have to live without luxuries in order to provide additional financial support for elderly parents
- 13% worry they will have to cut back on their working hours to look after their parents.
Ahead of the Government’s green paper outlining reform of adult long-term social care funding, Aviva has created the following plan to help families talk about their finances, both now and in the future:
For families struggling financially
- Communicate. Organise a family meeting as soon as possible, to discuss the financial problems you are facing. It can be difficult to talk about money, but by being open and honest with your loved ones now you can help to avoid the burden of debt and stress later in life. If you have any unanswered money questions, make sure you seek independent financial advice.
- Seek support. If you are struggling with managing your finances or making decisions about them, discuss granting Power of Attorney to another family member. Make sure whoever you choose understands responsibility that comes with this decision.
- Ask the experts. There are lots of organisations you can turn to for professional advice. As well as speaking with your local council, you can also seek help from organisations including:
Planning for the future
- Put a timeline in place. As people are living longer and healthier lives it's even more important to think about how and when you and your family can save for retirement.
- Plan ahead. Over two thirds (81%) of people in the "baby gloomers" generation admit they hadn't made plans for looking after their older relatives. Fairly small changes now can make a big difference to your family’s lives in the future - and you don't need to blow your monthly budget.
- Money saving options. Pensions can be confusing, but the truth is that a pension is one of the most effective ways to save money because you can get tax relief on the money you save in a pension scheme. If you’re a parent don’t be afraid to sit down and talk through your pension plans with your children to help avoid any surprises later in life.
Other useful sources of information include:
For Further Information:
Telephone: 0207 908 6433
Telephone: 0207 908 6477
Notes to editors:
*Aviva commissioned research with Tickbox amongst 1,711 25 year olds with 652 over 50 year olds between 06/02/2009 and 12/02/2009.
*Results from the December 2008 Aviva Report 'Understanding the Sandwich Generation' which interviewed 518 adults who look after both dependent children and elderly parents.
Aviva, the international savings, investments and insurance group, is the world’s fifth largest insurance group, serving 50 million customers across Europe, North America and Asia Pacific.
In the UK, Aviva is a leading provider of life, pensions, investment, general insurance and health products to more than 20 million customers. Aviva also provides roadside assistance through the RAC. Products are distributed through a number of channels including IFAs, brokers, corporate partners and direct to customers via the internet.
Aviva's UK Insurance business has a market share of around 15%, making it the largest general insurer in the UK. The business is focused on insurance for individuals and small businesses.
Aviva's life and pensions business in the UK has a total market share of 12% and a top three position in its key markets of savings, protection, and annuities.