‘Bank of mum and dad’ staying open longer as parents sacrifice retirement plans to support children
Parents in the UK increasingly expect to provide financial support to their children until their mid-twenties; A new survey reveals that the average expected age of independence is 26.
This expanded dependency is prompting some families to even consider moving to larger homes; One in 14 parents (7%) plan to expand their home, especially so that their adult children can continue to live with them.
The research, commissioned by savings and investment company M&G, draws attention to a significant change in the financial dynamics of the family.
Less than one in 10 parents (9%) believe their child will be self-sufficient by age 21, while nearly a fifth (18%) predict their “mom-and-dad bank” will remain open until their child is in their thirties.
Beyond day-to-day life, a quarter (24%) of parents expect to contribute to a deposit for their child’s first home, and a further 14% anticipate long-term help with rent or mortgage payments.
This long-term financial commitment reshapes parents’ own financial futures and potentially impacts their retirement plans. Almost two-thirds (64%) are ready to make lifestyle adjustments; 30% are cutting back on daily spending and 31% are cutting back on holidays or luxury purchases.
Looking ahead, one in seven (14%) are considering delaying retirement to maintain their support, and 11% are considering taking on an additional job.
The ripple effect also extends to the younger generation; Two-fifths (40%) of young people surveyed admit they expect to delay retirement savings until their thirties.
This delay causes them to save too little and arrive too late for their own retirement. The findings are based on a survey conducted by Opinium in April of 1,000 parents of 16 to 18-year-olds across the UK and an equal number of young people in the same age group.
Matthew Ings, chartered financial planner at M&G, warned that “while supporting children into their mid-20s is becoming the norm, if not planned for it can come at a cost.”
He added: “Many parents have been quietly receiving this support over time, often at the expense of their own retirement savings. At the same time, if financial independence is delayed, there is a real risk that retirement savings will also be delayed.”
Mr Ings stressed the need to “step back and take stock” as “financial independence is no longer a clear-cut milestone” and suggested a regular retirement health check could help families “understand the trade-offs they are making, stay on track and balance parents supporting their children today with protecting their own financial future”.
M&G, which explored intergenerational financial conversations as part of its ‘Reshaping retirement’ campaign, highlighted the importance of re-evaluating long-term financial planning in light of evolving family dynamics.
