A quarter (25%) of financial advisers are working with clients to release funds to help adult children, according to a new report.
Royal London has warned that this could dent the retirement standards of both the adult children and their parents.
Adult children are staying in the family home for longer, with over 1 in 10 (11.6%) of those between 30 and 34 living with their parents, according to figures released from the Office for National Statistics.
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.
“Thinking about the amount of savings you need for retirement means making some broad assumptions about how long you’ll live and the sort of lifestyle you’ll want to enjoy. The one thing it tends to assume is that at the point you retire you’ll no longer need to factor in housing costs. However, for an increasing number of people priced out of the housing market until much later in life and those who will continue to rent, that assumption may be wrong.
“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.”
• Royal London surveyed 218 financial advisers between 1 and 6 March.
