Parents forgoing their own pension savings to pay for grown up children
Research by Standard Life has revealed that one in three parents (30%) in the UK are currently making financial sacrifices for the sake of supporting their adult children.
The average parent is forgoing a pension pot of £38,500 in order to financially support each child who is 18 and over, according to the research. The study found that parents are supporting their children post 18 for expenses such as university costs, debts, weddings, house deposits and other general finances.
On average, parents estimate they will invest around £15,490 in each adult child. If this sum was invested into a pension instead, it could provide a pension pot of £38,500 in 20 years ‘time for a basic rate tax payer. And for a higher rate tax payer, it could provide a pension pot of £51,380.
This means a higher rate tax payer with two children could be forgoing over £100,000 from their pension pot. One in three (30%) parents admits they are currently forfeiting long term financial planning for the sake of their children, while almost the same number (31%) have made sacrifices in the past.
Standard Life’s John Lawson said: “A parent’s desire to provide for their children even when they become young adults is increasingly coming at a huge cost to their own future financial security. Our research highlights the significant financial challenges facing parents, whether to secure their long term future or meet their family’s immediate needs. The high level of unemployment among young people can only be exacerbating the problem. There’s no doubt that many more adult children will be relying on their parents for support which must be a real worry for many parents. Some may even be returning to the nest as they are made redundant or fail to find work.”