Tag: Bank of mum and dad

Children spend half a life at home with the parents

One in eight adult children who live with their parents could spend half their life living with mum and dad

One in eight (13%) adults that have always lived with their parents are aged 35-55+. That means people are spending almost half of their expected lifespans (81 years) if not longer living with their parents

Of those aged 35+ that live with their parents, 40% have never moved out

Over a third (37%) of adult children living at home don’t expect to move out in the near future

This could be costing parents a fortune – over half (55%) of parents with adult children living at home said they cover additional costs because of this. On average parents are spending £117 per child each month

It’s well documented that more grown-up children are now choosing to live at home with their parents for longer4. Now, new research from SpareRoom reveals just how much longer that could be: almost half of their lives – if not more.

One in eight (13%) of those who have always lived with their parents are aged 35 to 55+. Currently the average life expectancy in the UK is 81 years. That means people in their mid-to-late thirties have lived with their parents for nearly half of their expected lifespans – while those over 55 have spent more than two thirds (68%) of their lives under their parents rooves.

Furthermore, of all of those surveyed aged 35 – 55+, 40% have never moved out of the family home5.

Astonishingly, one in two (50%) adult children who currently live at home have never moved out. What’s more, 37% don’t expect to move out within the next six months, with the likelihood of moving out decreasing after the age of 25.

Whilst living at home and spending time with family is seen (by most) as a positive bonding experience, it has an impact on important milestones outside of the family home for children, not to mention the cost implications for parents.

The majority (55%) of parents with adult children living at home cover extra expenses because of this, with the average parent being out of pocket by £117 per child each month.

The bank of mum and dad, now also known as the hotel of mum and dad, helps pay for their adult children’s food (64%), clothes (36%), fuel (25%) and even ‘pocket money’ for them to socialise with their friends (25%) while they’re living at home.

Many parents also paid for their subscriptions (20%) and holidays (23%). Covering mental health and therapy (12%) costs were also on the list of expenditures for parents.

Miriam Tierney, SpareRoom spokesperson comments: “We’ve known for some time that the number of adults living at home with their parents has been rising. The main factor driving that is how expensive housing is, regardless of whether you’re renting or buying. What hasn’t been clear, until now, is just how much of their lives people could be spending in the family home.

“There are, of course, plenty of positives to multi-generational living and in many countries and cultures it’s the norm. However, in the UK the trend is clearly being driven by the housing crisis rather than choice and it’s restricting career and social opportunities for a whole generation.”

A third of young people could only last 4.5 months without family financial support

A third of all young people – those aged 18 to 34 – receive regular monetary ‘support gifts’ from their parents and grandparents, according to research from Legal & General Home Finance1.

According to the findings, of those who need financial support to make ends meet each month they could only maintain their current outgoings (e.g. bills, rent)  for up to 4.5 months if this support were to stop.

Many young people appear to utilise gifts from older family members to supplement their income. On average, since turning 18, young adults have received £19,347 in regular support gifts from their parents and grandparents2.

In 2020, the need for family support has increased further.

On average, parents who provide monthly support will give £1,356 a year, in the form of a monthly gift (or £113). This has increased by 26% in 2020, as parents  have added an additional £353 in support to help their children face the financial pressures of the pandemic.

The research comes at a time when young people are more dependent on family as a financial safety net than ever before, as Office for National Statistics results reveal that the unemployment rate among young people is far higher than the overall rate (14.6% vs 4.8%)3.

This pinch may be further impacted by a fall in seasonal jobs due to fewer available non-essential retail roles in the run-up to Christmas, typically filled by younger workers.

For parents that provide financial aid, the majority will come from their own savings (49%) or income (43%). 14% of parents will use property wealth such as the sale of property, to provide gifts. Legal & General has found that of its equity release customers, approximately 1 in 6 will use part of their payments to support gifting.

While most parents like to ensure gifting is split equally across any younger relatives (68%), in one in five cases (21%) the amount given varies across family members. This is usually driven by the individual’s needs (61%) but 27% parents admit they feel closer to the relatives they provide additional support to.

Claire Singleton, CEO of Legal & General Home Finance, said: “It is clear that without the generous gifting of parents and grandparents, many young people would be unable to independently sustain their lifestyle. The monthly cost may not initially seem high but as we can see from our data, the cost of gifting to younger family members can add up over time.

“In addition to monthly support, many parents and grandparents will be called on to provide additional one-off payments to help with large expenses like weddings or putting a deposit on a house.

“Utilising property wealth, by either downsizing or using equity release, can often be helpful here as it allows the opportunity to give a living inheritance without touching your income. However, these decisions aren’t easy and should be closely considered. Be sure to do your research, free information from the Money Advice Service is a great place to start, or, if gifting is likely to have an impact on your retirement income, turning to an adviser may be the right path.”

Many people who provide support are happy to do so, respondents to the research shared the following:

“I supported my younger brother when he started sixth form this year. It really makes me feel good, satisfied and enriched that I’m making a difference in someone else’s life.”

“We provided financial support to my partner’s children during the pandemic… they weren’t working, they didn’t have any savings to pay for their rent. We actually paid for all of them during the time of the lockdown. We’re quite happy to have supported them through it, I wouldn’t see them struggle.”

Those who receive financial aid often feel it brings them closer to their relatives, respondents to the research shared the following:

“It’s been hugely helpful for me as that gave me the push to buy at that time, it’s given me the chance to own my own home … It’s something I hope to be able to do for my own children in the future.”

“I recently received a sum from my aunt, she said she would rather be alive and see me make use of the money…since receiving it I definetely feel a lot closer to her. I just feel eternally grateful that she’s done that for me.”

NOTES

1.Opinium Research ran a series of online interviews among a nationally representative panel of 4,001 UK adults between the 25th September and 3rd October 2020

2.This is averaged across all people 18-34 who have received financial aid from their parents or grandparents.

3.https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/november2020