Financial Support for Adult Children: The Hidden Impact on Empty Nesters
Unveiling the Financial Burdens of Empty Nesters
A recent survey of over 1200 Australian parents aged 50 and above, conducted by Australian Seniors, has shed light on the financial challenges faced by empty nesters. The findings reveal that a staggering three-quarters of empty nesters are still financially supporting their adult children even after they have left the family home.
The Rising Trend of Adult Children Returning Home
- Data from the 2021 census shows a 16% increase in the number of people aged 25 to 34 living with their parents since 2016.
- More than 30% of parents have provided financial assistance to their children for expenses like rent, bond, or house deposits.
- 56% of Gen Z first-home buyers received familial support for their deposit, indicating a growing trend of parents assisting their children with homeownership.
The Impact Beyond Finances
Relationships Australia executive and clinical psychologist Elisabeth Shaw highlights the emotional toll of adult children returning home due to financial stress. Insufficient discussions and unmet expectations can lead to resentment and conflict within families.
Expectations and Realities of Adult Children Living at Home
- 76% of parents expect their adult children to contribute to household chores if they move back home.
- 62% expect their children to contribute to the household budget.
- Over 70% of parents cited reasons like financial stress, relationship struggles, and lack of alternative accommodation as justifications for their children returning home.
The Rise of the "Bank of Mum and Dad"
- The "bank of mum and dad" contributed $2.7 billion to the Australian housing market last year, comprising 1% of lending in the sector.
- Familial support for first-time buyers has increased fivefold over the past decade, with a significant number of Gen Z buyers relying on parental assistance for their home deposits.
Analysis:
The trend of adult children relying on their parents for financial support, even after leaving home, reflects the broader economic challenges faced by younger generations. The impact extends beyond bank balances, affecting family dynamics, emotional well-being, and long-term financial planning. As the "bank of mum and dad" continues to play a significant role in supporting younger Australians, it underscores the need for open communication, clear expectations, and sustainable financial strategies within families. Understanding these dynamics is crucial for individuals of all ages to navigate their financial futures effectively and cultivate healthy relationships with money and family members.