Why needy adult kids could ruin your retirement

Those champagne wishes and caviar dreams may have to wait if your adult children refuse to let go of those apron strings.

A recent survey found nearly half of older working Australians expect to retire with debt, as a large portion of their income currently goes towards funding their adult children’s lifestyles.

Research released by REST Industry Super uncovered the rapid growth of intergenerational dependency of Australian families finding more than $500billion given down, and in some cases, up, the family tree.

Older working Australians are the main culprits of generosity, pouring nearly $2B into their adult children’s pockets.

A staggering 72 per cent ($109B) goes to grown children over the age of 18 to help with their own, or their offspring’s, education costs.

More than $93B going towards everyday living expenses and a further $68.5B is dished out for home deposits.

While the door swings both ways (just not quite as far), only 14 per cent of adult children aged 35+ provide financial assistance to their parents for health or medical expenses.

This open-handedness towards adult children and ageing parents has resulted in 46% of older working Australians expecting to retire with some form of debt; the highest being credit card debt (25%) followed closely by mortgage debt (21%).

One in five will have enter retirement with the burden of a mortgage, despite REST’s survey showing older working Australians have on average, assets of $963,000 inclusive of the family home.

This figure is around 30 per cent more than the $742,000 currently held by the retirees surveyed.

Despite older working Australians earning more, they’re also spending more and one in 10 will face retirement with unpaid bills.

While 79 per cent of those surveyed felt good about helping their adult children pay for basics like education and housing, REST CEO Damian Hill warned there needed to be more of a balance “with a focus on saving for a comfortable retirement”.

The above findings come from a whitepaper commissioned by REST:

The Journey Begins, which surveyed 1048 Australians aged over 35. “While our research shows older working Australians are expecting a relatively high standard of living in retirement,” Hill explained, “this expectation could be derailed by the growing debt burden, particularly when funds are being diverted to adult children.”

Hill said despite many Australians not living the retirement they dreamed of, with careful budgeting and spending, it was still possible to achieve it.

Are you still supporting your grown children?