Becoming a young adult used to signal the beginning of independence; contributions towards bed and board would be paid, jobs would be secured and eventually the family home would be left altogether. This would enable parents to start stashing away some of their hard-earned cash to provide for a comfortable retirement.
However, with sky-high university fees, a competitive graduate job market and first-time buyer headaches, it seems that more and more young adults are retreating to their parents' homes, with more than one in 10 over-50s putting up their adult children rent-free.
According to research by Metlife, 25% of over-50s have children aged 18 or over still living with them. This is a trend that has grown rapidly over the last few years, with the number of children living with their parents as adults increasing by a quarter since 1996. Government data puts the current number of young adults residing with parents at 3.3 million, which is around 26% of the 20-34-year old population in the UK.
In the households that still shelter young adults, Metlife found that 43% of these children pay nothing towards household bills or expenses. Parents estimate that the cost of providing bed and board for their adult offspring is around £72 per week (over £3,700 a year), which is a hefty sum of money to come out of the household budget.
Even where board is being paid there is still a deficit that may affect parents' savings plans. On average, children who contribute pay around £51 per week towards household costs, which only goes some way to covering their expenses. As a result, only one-fifth of the parents surveyed said that having their adult offspring living at home added no extra expense.
However, it's not just adult children living at home that could drain the Bank of Mum and Dad; Metlife's research found that around 21% of parents lent money to children who had left home, with the average loan totalling around £2,600 - scarcely less than the funds being put towards bed and board.
Keeping adult children at home is clearly an expensive route, but it's one that many parents are happy to take. However, this could start to drain those important savings pots and jeapordise retirement plans.
Dominic Grinshaw, managing director of Metlife, cautions: "Parents need to think carefully about how they combine helping family with ensuring they are maximising their own retirement saving. The new pension flexibility will help savers adapt to the new retirement reality of increasing longevity, but the over-50s need to focus on looking after themselves as much as looking after [their] children."
So, if your children are still living at home rent-free, how can you ensure that you still build up a nice retirement pot?
Firstly, it's a good idea to explore your retirement options. New freedoms come into effect next year, so getting informed about them will help you to understand how much cash you need to stash away for your ideal retirement. You can start by reading our retirement guides and checking out our annuity planner. If possible, it's also important to keep putting away any excess funds into your pension pot. Little amounts can soon add up!
Building up an emergency fund to dip into should your offspring need a loan is also a good idea. This way, you won't have to raid your household budget to come up with the money. An instant access account is the perfect place for this sort of fund, so why not check out our best deals to get an idea of what deals are out there?
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