Parents fork out to support adult kids

Parents spend a staggering £233 billion on supporting their adult children, and are foregoing their own financial freedom to support their children, according to research from LV=, the insurance, pensions and investments group.

The study, which was carried out amongst adults aged 40 years and over who have children 18 years and over, found that nine out of ten parents (94%) continue to contribute financially towards education and other major purchases such as houses and cars, plus living expenses, once their children have reached ‘adulthood'.

Over half of all parents surveyed (55%) admitted to helping their adult children with general living costs, indicating that the ‘credit crunch' and rising living costs are impacting on the finances of adult children.

Nigel Snell, Communications Director at LV=, said: "Parents certainly like to financially contribute, if they can, towards large purchases for their adult children, such as weddings and deposits for first homes. However, it seems that the current economic climate is impacting on day to day finances too. Parents are the hardest hit, with a large proportion admitting that they are helping to cover their children's living expenses, as well as meeting their own financial commitments."

One quarter (23%) of parents aged between 40 and 49 years still have children aged over 25 years old living with them, indicating that despite falling house prices, adult children are not in a hurry to leave the nest, and may not be able to afford to either.

Supporting two generations

According to the research, it is not just their own children that parents are forking out for. Of those parents who have grandchildren too eight out of ten (79%) find themselves supporting both their own children and their grandchildren. This equates to 2.3m ‘grandparent' households.

Nearly half (47%) of those who contribute towards their grandchildren help out with money towards savings and investments, while one third (34%) help out with the cost of travelling.

Financial support into retirement

Almost half of all parents aged 70 years or older (45%) are still helping their children financially. Despite generally being retired and living on a reduced income, 55% of these parents state that they help their children because they feel it is their responsibility as a parent, and 42% state that they support their children ‘because they can afford to'.

Today's children are for life

In contrast to the pattern of behaviour today, less than one third (29%) of the parents questioned said that they had received financial help from their own parents after they had left school. Today, almost two-thirds of parents (62%) say they help their adult children because ‘they need the assistance' and 17% of parents say that their adult child actually asks them for financial support.

Nigel Snell concluded: "Our study shows that parents can no longer expect their children to pay their own way once they have flown the nest. More than ever it's true to say that having children means signing up to a lifetime financial commitment.

"Many parents will have had to put some plans on hold to manage the costs associated with raising a family, and once their children are old enough, parents should begin to encourage their own children to make small provisions, so that the financial burden can be reduced and parents can enjoy more financial freedom in retirement."