The growing number of adult children continuing to live at home could have “worrying” consequences for their parents’ retirement funds, warns Royal London.
According to a survey by the retirement specialist, more than 1 in 10 (11.6%) adults aged between 30 and 34 live with their parents.
Royal London said a quarter of UK advisers are now fielding requests from clients wanting to release funds to help their adult children financially.
Clare Moffat, pensions expert at Royal London, said: “The trend for adult children to live in the family home with their parents for longer could have worrying consequences further down the line for both groups. On the one hand parents are making sacrifices of their own to help their children financially but remaining at home for longer could also mean the children will still be paying housing costs into their retirement, as a result of getting on the property ladder later in life. This scenario will potentially dent the retirement standards of both adult children and their parents.”
Moffat said thinking about the amount of savings needed for retirement requires making broad assumptions about how long you’ll live and the sort of lifestyle you’ll want to enjoy. This often includes the assumption that housing costs will no longer need to be factored in at the point of retirement. However, for an increasing number of people prices out of the housing market until much later in life and those who will continue to rent, this could prove to be wrong.
Moffat added: “These groups will need to factor in an additional amount of money. For them, their retirement savings will need to stretch much further to accommodate housing costs every month. As the cost of living continues to bite, our research shows that significant numbers of customers are taking a lump sum from their pension specifically to help their children.
“While parents naturally worry about their children and have a desire to help them financially, they need to be conscious about running out of money over the course of their retirement, and need to strike the right balance.”
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