The cost of university is having a knock-on effect on parents and grandparents’ retirement as they help to fund costs, says Rathbones.
A survey of 1,010 parents and grandparents who are funding education costs for children or grandchildren found that 26% believe they will retire on a lower standard of living than originally planned. A similar number (24%) expect to delay retirement and nearly a fifth (17%) anticipate reducing pension contributions as a result of funding costs.
Among those expecting to delay retirement, more than two-fifths (43%) believe they will need to work for at least three additional years, including 11% who expect to postpone their retirement by more than five years.
Rebecca Williams, financial planning divisional lead at Rathbones, said: “It’s completely understandable that parents want to give their children the best possible start in life and for many, that still means university. But it shouldn’t come at the cost of their own financial security. Education is a worthwhile investment, but it’s important to be clear on the long-term cost and to balance that with your own plans.
“We often hear from clients who are in a strong financial position and want to do as much as they can for their children but still worry about the long-term impact on their own wealth and retirement plans.
“Education can absolutely be a worthwhile investment, but it’s important to be clear on the long-term cost and to balance that with your own plans.”
Rathbones’ research comes amid growing debate around the value of university education and the challenges facing young people entering the workforce. While 52% believe most well-paid jobs still require a university degree, many are weighing this against concerns about student debt (42%), the appeal of vocational routes (41%) and weaker graduate prospects (31%).
Separate Rathbones research shows graduates are not affected equally by student debt, with middle earners often facing the highest overall repayment burden. Those starting on salaries of around £45,000 to £50,000 can end up repaying more than anyone else in cash terms, as they remain in the system the longest and interest continues to build over decades.
Williams added: “With student debt now so significant, it can weigh on young people for years and start to shape the choices they’re able to make later in life. That said, from what we see with clients, many families still view university as an important stepping stone – they’re just being a bit more thoughtful about when and how they provide financial support.”
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