Families left vulnerable by retirement shortfall

A survey by HSBC reveals that 52% of parents with dependent children have no financial plan in place, leaving their families exposed to changes in circumstances such as ill health, job losses or life post-retirement.

Only 52% of parents in Britain have some type of life insurance cover in their financial plans to support their children – below the global average, and little more than the 41% of childless adults. More worrying, is that less than a fifth of parents realise this lack of life insurance puts them or their family at risk.

Just 18% of parents plan ahead for unforeseen medical expenses, while retirement planning actually becomes a lower priority when people have children; 67% of childless adults have retirement finances in place, falling to 56% of those with children.

And despite 81% of parents aspiring to pass on wealth to their children when they die, tax and inheritance planning are overlooked by most. A concerning 65% of parents in Britain have not made a will while just 27% of adults with a child have a plan for passing on their inheritance.

The findings emerge from an HSBC survey Why family matters, the latest in The Future of Retirement series, which explores changing attitudes towards retirement and financial planning among 17,000 consumers in 17 countries around the world.

Christine Foyster, Head of Wealth Development at HSBC, said:

“The fact that such large numbers of households are not planning ahead is leaving families greatly exposed to unforeseen events. Protecting the household’s financial assets during parents’ working lives will not only ensure that families can cope if there is a change in circumstances, but should also be seen as an important part of preparing for retirement”.

Christine added:

“It is crucial that parents the world over act now to secure their families’ future – and financial services providers must do as much as possible to help people make provisions for every eventuality.”