Parents’ financial commitments to their children do not end when their offspring start working life, with more than one in 10 parents of adult children giving over £50,000 to each child, according to a survey by the retirement specialists Responsible Equity Release.
The poll of more than 2,000 UK parents aged 55-65 revealed that even as they approached retirement, and after their children had left full-time education, many still heavily subsidise their adult offspring’s lifestyle. For the purposes of the survey, parents were asked about the spending on one child. If they had more than one child then they were asked about their eldest.
76% of parents who were polled who have children, aged over 18 and who have left full-time education, admitted they continue to help their young financially. The scale of parents’ generosity is highlighted by the sums involved.
48% of those parents polled said that have given at least £15,000 to their son or daughter since they left education, and 31% admitted they have handed over at least £30,000 or more to their offspring since they left education.
This outlines the financial strain on parents of bringing up children and that supporting them financially doesn’t end when they turn 18. Child Poverty Action Group recently estimated the total cost of raising a child until the age of 18 was almost £150,000. But the Responsible Equity Release data reveals that many parents continue to help their children pay their way well into adulthood.
But how are parents helping their adult children financially? Although parents expect to assist their children when they walk down the aisle, their financial commitments extend way beyond this.
Property costs have proved to be one of the major drains on parents’ incomes. 67% said they have subsidised their children’s housing costs in some way.
One of the biggest investments the ‘bank of mum and dad’ has helped their children with is the deposit for a house purchase. 17% of those parents surveyed have contributed to a deposit for their offspring, with a third (33%) of them handing over between £5,000 and £20,000.
Many support their children in other ways too. 61% have allowed their children to live with them rent-free at least once since they left education. 38% of the adult children living with their parents have done so for a year or more, and 8% have been there for more than three years.
Of those parents who’ve helped their children pay off student loans, 15% have contributed more than £2,500. While one in ten parents have helped subsidise their children’s holidays to the tune of more than £2,000. Clothes also stand out as a considerable and ongoing expense with 73% of parents admitting they have spent more than £2,000 on clothes for their adult children.
The cost of living hasn’t just been a factor for millions of parents around the UK – 39% of parents also admit to helping their kids out with general living costs. 24% of these parents have stumped up £2,000 or more to pay for day-to-day costs like utility and mobile phone bills.
Just 20% of parents expect their children to pay back any of the money given them. 38% said they did expect their children to repay them, but concede it is unlikely they ever will. While, 42% view the money as a gift rather than a loan and never expect to be paid back by their children.
The regularity of parents’ largesse is striking too. Seven in 10 parents say they give their children regular ‘pocket’ money, with 30% of those still giving their children money every week, and 24% helping out every month.
Steve Wilkie, managing director, Responsible Equity Release, said: “Every parent wants the best for their children and few ever begrudge them a penny. But our research shows that for many parents, the financial commitment extends well beyond the day when their children fly the nest.
“Traditionally the time when our children start to make their own way in the world is a time of mixed emotions – but reduced expense.
“But these days it’s harder than ever for young people to reach financial independence. The rising cost of living and the large deposits demanded by mortgage lenders are all expenses that young adults struggle to meet alone.
“As a result the ‘bank of mum and dad’ is funding more aspects of children’s lives, and for longer. All of those parents we surveyed were aged 55 to 65 – a time when the imminent approach of retirement usually encourages people to focus on their own finances and their pension preparations.
“But instead of saving hard for their own retirement, most are still bankrolling their children. Raising children to adulthood has never cost more, or lasted longer.
“In an era when annuity rates have collapsed and inflation is eating away at the value of pensioners’ savings, we all know we should be saving more, not less, into our pensions.
“But at least those who feel they cannot do so have other options. With house values on the rise once again, we are likely to see many more of us using equity release to unlock the value of our homes in retirement.”
