Multi-retiree families to exceed one million in next 20 years as retirement income stretches across generations

• 1.2 million families are expected to contain more than one retired generation by 2039 – increasing significantly from 624,000 families today
• A quarter (24%) of future retirees expect to provide financial support to someone other than their current partner in retirement – rising from 7% among today’s retirees
• 79% who receive ongoing face-to-face advice believe they have sufficient funds to fulfil their retirement plans, compared to 35% who don’t receive advice

A new study by St. James’s Place into intergenerational wealth and retirement planning has revealed that the number of families with multiple generations in retirement at the same time will exceed one million in the next 20 years, meaning people may need to start reassessing how they plan for the later stages of life.

The study, which analysed ONS data¹ and included research among 4,000 adults in the UK², forecasts there will be 1.2 million families containing more than one retired generation by 2039, rising from 624,000 families today. As the table below shows, it is anticipated that today’s number will grow by 13% to 704,000 over the next five years, with growth becoming steadily more dramatic as time goes on.

Source: ONS data¹

While, for many, retirement may still seem a long way off, the research reveals that people are already thinking about what the future may bring. A quarter (24%) of future retirees expect to provide financial support in retirement to someone other than their current partner, such as children, grandchildren, a former partner or a partner’s children. This compares with 7% of current retirees who already do so, and highlights how retirement income will increasingly need to stretch across generations within often complex family structures.

The most common ways future retirees anticipate providing financial support to other generations when they do retire is through everyday living costs (17%), followed by school or university fees (14%) and childcare (12%). Over a fifth (22%) feel either pressurised or worried by providing or the prospect of providing financial help to other generations.

Claire Trott, Head of Pensions Strategy at St. James’s Place, says: “With people living longer, the make-up of today’s modern family changing, and retirement provision more and more the responsibility of the individual, the way we need to think about planning for the future has fundamentally shifted. The next generation of retirees can’t expect to follow the same path as those currently in retirement.

“Building sufficient funds for your future whilst supporting other generations can seem a daunting task and it’s unsurprising that one in five people say they either feel ‘pressurised’ or ‘worried’ by having to provide financial support to others. We see consistently the value of advice in navigating this complexity and our research found that 8 in 10 (79%) people who receive ongoing face-to-face advice believe they have sufficient funds to fulfil their retirement plans. This compares with only 35% who don’t receive advice. It’s clear advice has an important role to play in ensuring a comfortable and confident financial future.”

Value of inheritance to decrease

As well as highlighting how changing family structures will increasingly impact retirement planning in the years ahead, the St. James’s Place research also reveals that people expect to pass on less after they have gone.

For those who have a sufficient amount of wealth, the amount they expect to pass on is likely to be significantly impacted, with future retirees expecting to pass on £50,606 less of their retirement pot on average compared with current retirees:

• Current retirees with £50k or more in household assets, that have or will pass on a percentage of their retirement fund to other generations, have an average of £261,375 in retirement funds (pensions and investments, including SIPPs), and have passed or expect to pass on almost half (48%) of their fund to other generations – amounting to £124,676 on average.
• Future retirees with £50k or more in household assets, that expect to pass on a percentage of their retirement fund to other generations when retired, have an average of £235,143 in retirement funds (pensions and investments, including SIPPs). On average, they expect to pass on 32% of their fund to other generations - amounting to £74,070.

Claire Trott, Head of Pensions Strategy at St. James’s Place, says: “Passing wealth on to our loved ones is one of the final acts of kindness we are able to make, so it is concerning that the amount many believe they will be able to pass on is eroding. However, that needn’t be the case. Putting in place the right plans at an early stage will allow greater opportunity to build wealth over time and leave behind as much as possible when you’re gone, without making unnecessary sacrifices along the way.”

¹ Estimating the number of families with multiple retired generations relies on looking at the age of children of the eldest age groups and projecting how changing demographics will impact these figures. We know approximately how many older age groups have a child aged 65 and above currently, and we have applied those percentages to the ONS projections of increased numbers of adults aged 80-89 and 90+, to ascertain future numbers of families with more than one generation in retirement.

² Opinium Research carried out an online survey of 4,000 UK adults aged 18+ from 18 to 24 April 2019. Results have been weighted to representative criteria.