UK Adults Increasingly Spend On Ageing Parents

Chances are you’ve heard of “the bank of mum and dad,” or adults relying on their parents for anything from house down-payments to holidays.

But the “reverse bank of mum and dad,” which sees adult children spending on their ageing parents, is a growing phenomenon, says James Mulvaney, Head of Digital at Clifton Private Finance.

Already, 55% of UK adults with living parents financially help, or expect to help, them in retirement. Only 45% of adults in midlife (45-54 years old) are optimistic about their parents’ finances, a figure that drops to 2% among 18-24-year-olds.

“Several factors are driving this shift,” Mulvaney said.

“Rising care costs and the wider cost of living crisis have made retirement much more expensive, while many older homeowners are discovering that their pensions may not stretch as far as they once expected.”

Then, investment platform Ageon noted, there’s the fact that people are living longer lives. That means that savings, investments, and pensions may have to go further than expected.

“At the same time, families are recognising that housing decisions can play a major role in supporting older relatives,” Mulvaney added.

While the parents of over-50s may have benefited from lower house prices in their youth, parents of younger adults may have been part of a pricier housing market, which offers less return on investment.

Housing is the biggest source of household wealth in the UK (40%), followed by private pension wealth (35%).

“For many households, helping parents navigate retirement is becoming just as important as helping younger generations onto the property ladder,” said Mulvaney.

“And with housing playing such a central role in family finances, property is likely to remain at the heart of how families support one another for years to come.”

Mulvaney told us communication is key.

“One of the most effective steps you can take to help your older parents is reviewing their retirement finances together,” he shared.

That could involve reviewing their monthly outgoings, planning for care costs, and/or a simple budget.

It might also be worth discussing downsizing, which can “release equity from a larger home while also reducing maintenance costs and household bills”.

Lastly, Mulvaney said, “It’s also worth checking whether parents are claiming all the financial support they are entitled to. Recent DWP figures suggest almost one million pensioner households are missing out on an average of around £2,600 a year in Pension Credit, so checking eligibility can be one of the most valuable steps families take.

“Benefits such as Pension Credit, Housing Benefit, Council Tax Reduction, and Winter Fuel Payments can make a meaningful difference to retirees on lower incomes.”