The rise in multigenerational households, where adult children continue to live with their parents, could be storing up retirement issues for the future, according to Royal London.
Figures from the ONS revealed that the number of families in England and Wales with adult children living with their parents rose 13.6 per cent between the 2011 Census and Census 2021 to nearly 3.8mn.
In 2021, one in every 4.5 families (22.4 per cent) had an adult child, up from around one in five (21.2 per cent) in 2011.
The total number of adult children living with their parents increased 14.7 per cent in the same period from 4.2mn in the 2011 census to 4.9mn in census 2021.
Clare Moffat, pensions expert at Royal London, said: “The trend for adult children to live in the family home with their parents for longer could have worrying consequences further down the line for both groups.
“On the one hand parents are making sacrifices of their own to help their children financially, but remaining at home for longer could also mean the children will still be paying housing costs into their retirement, as a result of getting on the property ladder later in life.
“This scenario will potentially dent the retirement standards of both adult children and their parents.”
The figures revealed that adult children are staying in the family home for longer, with more than one in 10 (11.6 per cent) aged 30 to 34 years living with their parents
Moffat said: “Thinking about the amount of savings you need for retirement means making some broad assumptions about how long you’ll live and the sort of lifestyle you’ll want to enjoy.
“The one thing it tends to assume is that at the point you retire you’ll no longer need to factor in housing costs.
“However, for an increasing number of people priced out of the housing market until much later in life and those who will continue to rent, that assumption may be wrong.”
She explained that these groups will need to factor in an additional amount of money.
“For them, their retirement savings will need to stretch much further to accommodate housing costs every month,” she said.
Meanwhile, Royal London commissioned research conducted by Opinion between March 1 and 6, 2023, with a sample of 218 financial advisers.
It found that a quarter (25 per cent) of UK financial advisers are fielding requests from clients wanting to release funds to help their adult children financially.
“As the cost of living continues to bite, our research shows that significant numbers of customers are taking a lump sum from their pension specifically to help their children,” Moffat said.
“While parents naturally worry about their children and have a desire to help them financially, they need to be conscious about running out of money over the course of their retirement, and need to strike the right balance.”
sonia.rach@ft.com
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