Cars, weddings, houses: More Generation X parents are funding their adult children’s lives – even past retirement
The Bank of Grandma and Grandpa is flourishing, with parents offering more support to their adult kids well into retirement. But there are some expenses where they draw the line.
The Bank of Grandma and Grandpa is open for business, with many parents planning to financially support their adult children well into their retirement, a new study has found.
An in-depth study of 30 middle-class families in Victoria with at least one child aged 18 to 25 has found over half of the ageing parents are factoring the ongoing support in their retirement planning.
Lead author Julia Cook from the University of Newcastle said the “intensive parents” interviewed were keen to support their young adults with investments and commitments beyond the adolescent years in order to avoid the “real possibility of downward class mobility”.
Help on offer included renovating homes to enable their offspring to live at home rent-free for longer, buying them a car, paying for their medical insurance and paying for their weddings.
However, kids were expected to pay for their own entertainment, clothing and takeaway food.
Dr Cook said such ongoing support well beyond age 18 “may initially appear to be at odds with the desire to cultivate greater independence that many of the parents also articulated”.
But over time parents were trying to loosen the supports to enable their children to “stand on their own two feet,” she said.
One father said he “used to drive the eldest around and now I’ve given her a car to drive around in”.
Parents reflected on how this ongoing support affected their lives, with one single dad saying it was “crap for your romantic life because you just can’t have any”.
Another said ongoing support was “what we signed up for” when they had children.
It comes as Productivity Commission data shows those aged 18–34 are in a weaker financial position than any other living generation were at a comparable age.
The parents in the study were aged in their early 50s and finished secondary school in 1991. More than two-thirds were in traditional nuclear families.
Together they had 58 children aged over 18, 44 of whom were still living in the family home. Seven of the 14 children over 18 who had moved out were still studying and received some ongoing parental support, from living in a property owned by their parents or help with rent.
“Support with financing a vehicle was very common throughout the sample, with most participants paying for all or part of their young adult child’s first vehicle once they had obtained their driver’s licence,” Dr Cook said.
“Support with covering university fees was much less common.
“All adult children who were living in the family home and studying, and most who were not studying, were not charged rent or board, and most received assistance with additional expenses such as transport and car and medical insurance.”
One mother of children aged 20 and 22 said the purpose of her children staying at home was to “help them to save some money” by not charging board.
Dr Cook said “just over half of the participants’ retirement planning actively accounted for the financial needs of their children, whether this was renovating their home to facilitate prolonged cohabitation or setting aside funds to assist with entry into home ownership.”
One parent noted that it would be hard to pay for her three daughters’ weddings and she and her partner talked about “working ’til we were very old, I think, to cover all those costs”.
Dr Cook said the parents in the study were mostly “aware of the structural challenges facing contemporary young adults and viewed their support as a necessary means of ensuring that their children would be buffered from the impact of these challenges”.
“Notably, this appears to represent a social change, with many of the participants reflecting on the fact that they received comparatively less financial and practical support from their own parents, and that they stopped receiving this support earlier in their young adulthood than their own children did or will.”
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Originally published as Cars, weddings, houses: More Generation X parents are funding their adult children’s lives – even past retirement
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