Yahoo Finance A third of wealthy parents forced to bail out financially struggling children
Almost a third of higher earners have had to start providing financial support to their adult children who are struggling with rising costs.
Adults are draining the coffers of the so-called “Bank of Mum and Dad” during the cost of living crisis, according to research by Saltus, a wealth management firm. A third of parents are helping their children to pay household bills, 31pc are helping with energy bills, 29pc with transport costs and 27pc with mortgage payments, it found.
A further 27pc of respondents, all high net worth individuals with £250,000 or more in investable assets, said they had reduced their pension contributions to provide the additional support their children needed. A quarter had sold an asset to free up funds.
Just 13pc of those surveyed said they were not providing their children with any financial support.
Michael Stimpson, of Saltus, said the research showed “just how much help adult children need and are getting,” as well as “the lengths to which parents are prepared to go” in the current economic climate.
He said: “We've seen a lot of clients putting less money into their pension so that they can help with mortgage payments and utility bills. We’ve seen some clients have their children move back in with them because they can't afford to pay their rent.”
Mr Stimpson added: “I've had two clients who have actually delayed their retirement because their outgoings have gone up as they have to help their children. We are seeing quite a lot of this across the board.”
The findings were part of the Saltus Wealth Index report, a bi-annual barometer tracking the confidence and concerns of high net worth individuals.
Michael Peacey, a senior lecturer in economics at Bristol University who worked on the report, said the current economic crisis was “bringing forward a transfer” of inter-generational wealth.
He said: “Traditionally, parents have helped out with deposits on houses, and investments in education and those things are the kind of investments that the child has going forward and it grows with them.
“Whereas paying for an energy bill is just an increased cost, which means if it is inheritance that’s being brought forward, it's disappearing in a way that it wouldn't in the other kinds of situations.”
Mr Stimpson said that none of his clients “are expecting this to be the new normal”, but warned of the lasting impact on finances if adult children had to continue to be supported to this extent.
He said: “If millennials' lives are unaffordable for them for an extended period of time, that is going to cause a huge problem because parents have been planning for their retirement based on what their needs will be, not what their needs and their children's needs will be.”
