One in three parents are forced to postpone retirement to fund their children through university, new research reveals.
The Bank of Mum and Dad are working for longer as their children face soaring living costs and surging student rental payments.
Some 33 per cent of parents work for longer than their desired retirement age, according to wealth manager Rathbones.
While these parents expect to work on average five years longer than they wanted, 27 per cent of parents have been forced to postpone their retirement date by as much as a decade to bankroll their student children through university.
The Bank of Mum and Dad are giving their children an average of £7,200 a year to get through university as student finance rarely covers an undergraduate’s so-called ‘maintenance’ costs such as rent payments, food and bills.
Kids first: One in three parents have postponed retirement to fund their children through university
But 14 per cent are giving their child between £10,000 and £15,000 every year and a further 8 per cent are shelling out more than £15,000 each year.
More than one in five families cover all costs including tuition and living costs while more than one in four just pay for living costs.
But this assistance is placing financial strain on families. Almost two in three parents have cashed in savings to cover the cost of funding their children through university while 29 per cent have sold investments.
Others have reduced pension contributions (17 per cent), borrowed on credit cards (also 17 per cent), remortgaged (13 per cent) or downsized their homes (4 per cent).
And this financial help doesn’t stop after graduation – 55 per cent of parents are still supporting their children after university, according to Rathbones.
Faye Church, senior financial planning director at Rathbones, said: ‘It’s not just the three or four years of university costs that parents need to plan for anymore but what happens after graduation.’
‘The Bank of Mum and Dad is now supporting adult children for longer, which is having significant financial consequences, both in the immediate and in the long term.
‘Sadly, this issue shows no sign of abating as the path from university to financial stability appears more and more uncertain.’
Parents’ financial strains continue into their children’s young adult life as a tough graduate job market means it can take an average of six months to find a first professional job.
Fewer than one in three families say their children will be financially independent once graduated.
And even when graduates do secure one of the rare jobs on offer, their salary may be lower than expected.
Plus, graduates must repay their student loan as soon as they earn £25,000 a year on the most recent Plan 5 scheme.
Young professionals must pay 9 per cent of their income over the threshold each month.
However, the financial strain of university is worth it, data shows, as graduates at age 31 earn an average salary of £30,751 compared to just £22,482 for non-graduates.
Ms Church says helping your children through university ‘need not be the death knell for retirement dreams’. She urges any worried parents to seek the help of a financial adviser and planner who can look at your retirement goals.
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