Younger generations of adults may need to financially support their parents in the future as patterns of wealth across generations evolve.
New research by Aegon has revealed that while two thirds of adults benefitted from the ‘Bank of Mum and Dad’ when they were younger, 55% of all age groups of adults expect to support their parents financially in their retirement.
Nearly two fifths (38%) of adult children regularly pay for dinners out, while a quarter (25%) help to cover everyday bills.
Aegon said that while 46% of 45 to 54 year olds are upbeat about their parents’ financial prospects, this drops to just 2% among 18-24 year olds.
Steven Cameron, pensions director at Aegon, said the data showed that rather than rely on parents for financial assistance, the “tables are turning.”
Cameron commented: “More than half of adults with living parents are already or anticipate that they will be the ones stepping in to provide financial support to their parents as they journey to and through retirement. This research shows that there is a generational trend when it comes to who will be financially comfortable in retirement and which generations may need help.”
The research found 34% of people worry whether their parents will have enough money to get by comfortably in retirement. Cameron said the reasons behind their concern are complex, including the decrease in final salary pensions, with future generations expected to rely on less generous defined contributions. Parents of those in their 50s may also have benefitted from more affordable house prices when they were younger, with parents of younger adults often not faring so well.
Cameron added: “Generation by generation, we are on average living longer and living to 100 is now a real possibility. These findings are a reminder that you can’t assume your later life will look anything like that of your parents. For many, their Second 50 will be uncharted territory and individuals need to look at their own unique circumstances to plan to make the most of later life.”
