Middle Age Parent Trap
End of early retirement threatened due to costly kids
Millions of parents in Britain[1] are being forced to postpone their retirement to meet the rapidly rising financial burden of supporting their adult children, according to The Children’s Mutual.
Research from the award winning Child Trust Fund provider has found 57 per cent[2] of parents of 18 – 30 year olds, say they have no choice but to retire later – with four in 10 (43 per cent)[3] expecting to work up to five years longer than they wanted because of the cost of their ‘adult’ children.
The news is worse for nearly one in 10 (9.3 per cent)[4] parents who believe they will now be forced to work over a decade longer with some abandoning the dream of retiring altogether.
Initially, 75 per cent of parents planned to retire before they reached 65[5]; now 40 per cent[6] have accepted the fact that they will not retire before the ‘official’ retirement age.
These stark figures show that nearly eight in 10 (79 per cent)[7] parents claim their ability to save for their retirement has been impacted by the unplanned financial support being needed by their offspring – with a third of those (32 per cent)[8] suggesting it has been significant.
David White, Chief Executive at The Children’s Mutual said; “Worryingly, the number of parents getting caught in this middle age parent trap will almost certainly continue to rise - however parents of today’s youngsters can start to plan financially from the outset of having children and in so doing extricate themselves from this cycle.
“It’s clear that the concept of a retirement age will become increasingly fluid and for some it might even become totally irrelevant. It is imperative that we empower parents of today’s youngsters to ensure that their retirement dreams and the hopes for their offspring are not compromised. Investing in a Child Trust Fund or other long term savings vehicle from the outset is one way to help ensure that the keel remains even.”
Dr Liam Foster, Lecturer in Social work at the department of sociological studies, University of Sheffield, comments, “The Children’s Mutual’s research rightly emphasises the significant impact that having children can have on retirement provision. These findings are increasingly significant given the Government’s aim to encourage tomorrow’s pensioners to become ‘rational actors’ and save for retirement.
In reality, it is often the case that a lack of financial knowledge results in people making decisions which don’t match their expectations in retirement. With the state pension age increasing and a growing emphasis on individual responsibility for provision in retirement there has never been a more appropriate time for people to consider their future pension needs.”
expect to forego travel plans
The research from The Children’s Mutual was undertaken among 1,484 parents of children aged 18 and over, other findings included:
- Eight per cent of parents with three children say they won’t be able to retire, this rises to 14 per cent[11] for those with four children
- Parents earning £26k – £35k have had their retirement plans impacted the most significantly[12]
- 94 per cent of parents in Wales have had to reduce or stop the amount they save for retirement or put saving for retirement on hold altogether because of the cost of supporting their adult children, compared to 54 per cent in East Anglia and West Midlands[13]
- Half of parents[14] wish they’d saved more to support their children financially.
David White concludes: “Parents of today’s young adults face an unenviable choice – secure their retirement or fund their childrens’ futures. Despite their best intentions, our research shows that for millions of Britons adequate provision for both is currently well out of reach.”
[1] Jan 2010 Cost of Children research – Q3
[2] Jan 2010 Cost of Children research – Q3
[3] Jan 2010 Cost of Children research – Q3
[4] Jan 2010 Cost of Children research – Q3
[5] Jan 2010 Cost of Children research – Q4
[6] Jan 2010 Cost of Children research – Q4
[7] Jan 2010 Cost of Children research – Q1
[8] Jan 2010 Cost of Children research – Q1
[9] Jan 2010 Cost of Children research – Q2
[10] Jan 2010 Cost of Children research – Q2
[11] Jan 2010 Cost of Children research – Q3 [split by the number of children]
[12] Jan 2010 Cost of Children research – Q1 [split by income]
[13] Jan 2010 Cost of Children research – Q1 [split by region]
[14] Jan 2010 Cost of Children research – Q6
