Parents warned against using up retirement income

The UK is becoming a nation of ‘children for life’, with many parents subsidising their children far later into adulthood than a generation ago - even once their dependents have become parents themselves, according to a new survey by GE Life. This raises the concern that, as a result, many may leave themselves out of pocket in later life.

Two thirds (66%) of the over 50s questioned received no financial help from their parents when they were in their 20s. But at least six in 10 (64%) currently help their grown-up children because they “need their assistance” or feel it is their “responsibility as a parent”. This is a real indication of how times have changed for today’s twenty-somethings who increasingly seem to be turning to the ‘Bank of Mum and Dad’.

Where does it end?

Despite many pensioners struggling to make ends meet in retirement, the study reveals that many parents continue supporting their children way into adulthood.

If the findings of this research were considered in a wider context and were applied across the whole of the UK, you will see that in monetary terms the amounts would be quite substantial:

Half of parents have paid towards their child’s first car, spending an average of £1, 854 and totalling more than £18 billion

43% of parents have paid an average of £2, 877 towards their child’s wedding – a total of £24 billion.

More than a quarter have helped their child get on the property ladder, spending an average £5,796 each – altogether £32 billion.

University fees are a huge investment for parents who pay out an average of £7,665 over three years for their children – totalling more than £61 billion.

Fending for themselves?

In addition to living with their parents longer, children over 18 years old are being helped-out by their parents on a daily basis, with three in ten (30%) over 50 year olds saying they pay towards some, or all, of their children’s living costs.

Financial support even extends beyond the grave. Half of over 50 year olds (49%) say they have already set aside cash for their children, with a further 24% saying they plan to do so, in the event of their death. At least eight in ten (84%) also say they plan to leave their property to their children. However, it doesn’t stop with children; 20% of grandparents are also paying out regularly for their grandchildren.

Twenty-something and broke?

The main reason why today’s over 50 year olds still help their twenty-something children out is because they believe they are financially not capable of doing it themselves. At least six in ten (64%) said their children needed their financial assistance, with at least four in ten (44%) saying they felt obliged to help out. Fourteen per cent helped out because they said their children asked them for money.

Kirsty Macpherson, GE Life spokesperson commented, “GE Life’s study reveals that many parents never stop paying-out for their children and could potentially be leaving themselves out of pocket in later life. Even after death, they are still planning financially for their children, with 73% planning to leave money for them, and 84% planning to leave their property for them. However, if they’re struggling to make ends meet, their property could, in fact, be an important source of income for themselves when they most need it. The worry here is that parents are forking out for their children in the later years of their working lives and are not putting enough money aside for their own retirement.

“The amount that parents spend on weddings and first cars for their children in a lifetime is astronomical. It may be time for parents to begin cutting those apron strings and start planning for their own future, with the benefit of sound independent financial advice.”