Pension funds routinely hit to fund your adult children
With stagnating wages, high house prices, and high youth unemployment, adult children are living with mum and dad for longer, according to the Office for National Statistics. In fact in 2014 the number of 20 to 34 year olds hit a record 3.3million. This figure is also unlikely to change in today’s economic climate.
Other than a lack of personal space and free time, parents are finding themselves paying for their adult kids; with many are turning to mum and dad for subsidies. According to the Daily Mail, almost half paid no rent or bought any food.
Sometimes, this causes difficulties in the parent / adult-child relationship.
Retirement plans, the knock on effect
With so much income flowing from your bank account to your adult children often it is your pension that takes the hit. This seems to be an ongoing pattern in the UK and America, with both low and high earners sacrificing their retirement lifestyle to give money to their kids. This is not always due to the fact your child is living with you, some receive subsidies to rent a flat, and other adult children receive an allowance.
The Advice from Financial Professionals
Not surprisingly, most financial professionals advise a different path than constant subsidies for adult children. Although some like, Jericho, N.Y. Brett Goldstein has declared its hard to get between a parent and adult child even when the parent has low funds, the general sentiment is summed up well by John Sweaney of Fidelity Investments. He advises:
“Giving them tens of thousands of dollars a year for apartments, cars, and restaurant meals sends the message that you’ll keep paying for a lifestyle they can’t afford on their own—and you probably can’t or don’t want to fund forever.
“Better to teach them to burn less than they earn, and save all you need for a long old age.”
Considering the stories that surface in the press, this is wise advice. Take Sally, 52, a respected lecturer. Talking to the Mail Online she regularly pays her son £150 per week allowance as he was working unpaid as an interim. For about a year however, he has asked for more cash from his parents.
She said: “For the past year, he’s become impossible. He wants flash clothes, a new smartphone, money to eat out; and last week he even demanded £1,000 so he could go skiing with some university friends.”
Seek Financial Advice
With the new demands on your finances, having better financial planning becomes essential, especially if you are considering dipping into your retirement funds. Your first step is to give your children some tough love, and the next is to speak to me about your finances and the standard of living you want in retirement. Together we can formulate a plan to ensure your finances cover your needs. Click here and complete the Call Back Service Form.