Three in five (61%) parents of adult children support them financially, but this is having a lasting effect on their ability to save for retirement, according to Standard Life.
Three quarters (74%) of parents of over-18s who provide financial support say it has affected them financially. A quarter (27%) have dipped into their savings and a fifth (18%) say they are saving less for the long term.
A further 12% say they have contributed less to their pension than they had hoped, while one in seven (15%) have or are planning to delay their retirement or have a more modest retirement as a result of offering financial support.
Standard Life’s research revealed a myriad of reasons for financial support. More than a quarter (26%) of parents are helping them with everyday living costs such as rent, bills and food, while 13% are giving them a helping hand onto or up the property ladder and a similar proportion (13%) are funding one-off purchases such as cars or household items.
Some parents are also focused on longer-term support, with 11% contributing to savings accounts for their children and 10% supporting or saving for grandchildren.
Despite the financial pressures, two in five (39%) say they are happy with their decision to provide financial support and 57% say they expect nothing in return.
These parents cite a strong sense of responsibility (46%) and a desire to protect their children from debt or financial hardship (47%) as key motivations, while a third (36%) say they want to help their children achieve long-term financial security. A further one in 10 parents (11%) also see support today as a form of early gifting for inheritance tax purposes, ahead of pensions coming into scope of inheritance tax from 2027.
Mike Ambery, retirement savings director at Standard Life, said: “For many parents, helping their children financially is something they would do in an instant, without hesitation.
“Life is rarely linear, and like many other milestones, it’s completely normal for pension savings to take a back seat when focusing on supporting children. However, at the same time, parents mustn’t lose sight of their own financial goals. Everyone’s journey to and through retirement can be better and understanding where you are in terms of your own long-term finances is also important, to ensure you are heading towards the retirement you envisage.
“This means setting clear expectations with your children about the level of support you can realistically provide, making sure you’re still contributing what you can afford into your pension, and ensuring you’re thinking about how much money you will realistically need for retirement – striking the right balance between supporting children today and staying engaged with your own financial future.
“For parents with younger children thinking ahead and starting early, even with small amounts, can help build financial resilience for the next generation while keeping your own long-term plans on track. Junior ISAs and even child pensions are a great way to do this, providing a tax-efficient way to give children a head start and potentially benefit from compound interest or investment growth from the earliest moment possible.”
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