Parents are being forced to reconsider their retirement plans as children and grandchildren increasingly rely on the ‘Hotel of Mum and Dad’, a new report has revealed.
The study, published by price comparison website MoneySuperMarket, shows that over a quarter of young adults aged 20-34 continue to live at the family home enjoying the comforts of free home-cooked meals, energy use and utilities.
It means that the cost of living to the hoteliers – AKA, Mum and Dad – is becoming increasingly unaffordable on a modest retirement income.
The culture to linger in the nest longer than ever is being driven by the unaffordability of house prices and rent. According to the research, millions of young adults do not earn enough to save for a deposit and secure a mortgage, while crippling rents can wipe out a month’s salary leaving little for savings.
Commenting on the report, Emma Craig, of MoneySuperMarket, said: “I think what we’re seeing is more young people with more debt, so when they’re going back to their parents’, they’re coming with higher student loans, probably credit card debt, maybe payday loans.
“So the reason parents are paying more is they’re trying to look after their children more. If your child comes home and you see them struggling financially, you feel more awkward asking them for rent or to contribute. It tugs on your heartstrings more.”
MoneySuperMarket suggests that the only way to take back control of retirement finances may be to charge rent or ask for some sort of financial contribution, such as doing the weekly shop or paying for utility bills.
The report comes shortly after a separate study revealed that the ‘Bank of Mum and Dad’ now lends £6.3 billion to children every year to help them get their foot on the housing ladder, making it the 10^th biggest mortgage lender in the UK.
According to the study, nine per cent of parents are cashing in lump sums from their pension savings, seven per cent are using their pension drawdown and six per cent are drawing on their annuity income to fund the contribution.