As more families struggle to keep up with the cost of living, new research shows that the “Bank of Granddad and Grandma” is helping to keep many of them afloat.

How much are YOU planning to financially support your family in the years ahead?

New research from wealth management company Quilter reveals that older people are increasingly choosing to pass on wealth during their lifetime, with spending on gifts to family and education support now accounting for one in every six pounds that retirees spend.

In their latest annual Retirement Lifestyle Report, analysis by the Centre for Economics and Business Research reveals that the average retiree now gives £2,272 a year to relatives and spends a further £2,250 on education costs for children and grandchildren.

Together, this amounts to £4,522 a year.

Family support now accounts for 17% of annual retiree spending, making it one of retirees’ largest outgoings and ahead of spending on groceries.

The figures underline the growing financial role retirees are playing in supporting younger generations.

Policy changes also appear to be influencing behaviour, with 39% of retirees saying the current political environment is affecting their inheritance tax planning. Some 33% are looking for more tax-efficient ways to save, 27% are considering moving abroad, 27% are using trusts, 26% are putting assets into relatives’ names and 26% are gifting more to family and friends.

Other takeaways from the report

The planned inclusion of unused pension pots within estates for inheritance tax purposes from April 2027 is also prompting many to rethink their retirement strategy.

More than a quarter (29%) plan to spend more of their pension savings during their lifetime, 26% intend to gift more of their pension wealth, and 24% expect to access their pension earlier than originally planned.

When charitable giving is included, which has risen by 100% year on year, retirees direct an average of £6,619 a year, or almost a quarter of total spending, towards family members, younger generations and good causes. Alongside spending on holidays and home improvements, which has increased by 39% and 40% respectively compared to last year, these are the top five drivers of the increase in the average retiree spending.

Holidays remain retirees’ largest annual expense at £2,973, followed by home improvements (£2,776). Gifting to relatives (£2,272) and supporting education (£2,250) now rank ahead of groceries (£2,110), illustrating how discretionary spending and intergenerational support are becoming increasingly prominent features of retirement budgets.

Despite this generosity, many retirees remain anxious about their own financial future, with 60% concerned about maintaining their current standard of living over the next year, while average retirement income rose by just 1.2%, well below inflation over the same period.

How can your RetireEasy LifePlan help YOU support other family members?

If you have plans to support family members either before or during your retirement, you will want to know exactly how much you can afford without negatively impacting your other spending plans.

This is where the RetireEasy LifePlan really comes into its own.

It will tell you exactly how much a gift now or in the future will affect the income you can comfortably withdraw in every year of your retirement.

That allows you to plan ahead… with complete peace of mind. And all for just a few pounds a month.