Parents and grandparents are putting their retirements at risk to pay pocket money to their adult children, a new study suggests.
Exclusive data provided to The New Daily provides a sobering counterpoint to the anger of millennials at soaring property prices, record-low wage growth and a tough labour market.
Fifteen per cent of Australians aged 35+ admitted in a new survey to receiving help from immediate family to cover everyday expenses beyond the age of 18.
Of those who received pocket money into adulthood, women (20 per cent) were almost twice as likely as men (11 per cent) to rely on the ‘bank of mum and dad’ or ‘grandma and granddad’ to pay for things like food, clothes and rent.
These findings were extrapolated from a new report from super fund REST, which is deeply concerned the generosity of older Australians will come back to bite them in retirement.
The “irony”, according to REST chief executive Damian Hill, is that pocket money from parents is “no free lunch” for the young adults who receive it, either.
“Children who are getting this assistance are more likely to have to provide assistance up the family tree later in life, potentially compounded,” Mr Hill told The New Daily.
“If parents are giving their children more in that earlier stage of life, they themselves could become a burden on their children.”
Based on the survey of 1048 people aged 35+, ‘everyday expenses’ was the single biggest category of gifts from Australians to other generations. House deposits, weddings and education couldn’t rival it.
REST calculated that retirees paid, over their lifetimes, $43.1 billion worth of everyday expenses racked up by other adult family members, dwarfing even home deposits ($37.9 billion), education ($37.6 billion) and weddings ($13 billion).
It’s important to note that the recipients of this $43 billion in pocket money may not have been just millennials. Ageing parents and grandparents could have benefited as well. Millennials were not surveyed directly.
But the survey also found the vast majority (81 per cent) of ‘intergenerational spending’ was between parents and adult-aged children. Furthermore, REST estimated that 52 per cent of the financial help provided by parents to their adult children was for everyday expenses — strong evidence that millennials are getting pocket money.
For Australians aged 50+ and still working, gifts to other generations were mainly for education ($55.9 billion) followed closely by everyday expenses ($51.7 billion) and home deposits ($31.6 billion).
And for the generation below, Australians aged 35-49, pocket money was again the biggest gift. They spent $35 billion on the ‘everyday expenses’ of their immediate family, including presumably their adult children, REST found.
Mr Hill said the ‘pocket money’ trend could be linked to the rising popularity of tertiary education, with older Australians shelling out for tuition fees and living costs while their relatives (especially their daughters) study.
“It’s plausible that parents are trying to ensure their daughters are financially secure from an early age, less reliant on finding a ‘knight in shining armour’ and being able to stand on their own two feet,” he said.
“We’re obviously seeing trends of increasing participation by women in tertiary education and some of that support will be parents making sure they can get a good start to life, knowing they are likely still to take some time out of the paid workforce to raise a family.”
Whatever the reason, giving pocket money to relatives up and down the family tree is having a detrimental effect on retirement, Mr Hill said.
One in four survey respondents expected to retire with credit card debt, one in five with a mortgage and one in 10 with unpaid bills.