The results of the survey show that parents are facing increasing financial stress in an effort to help their offspring navigate through the first years of adult life. More parents are delaying retirement, renounce lifestyle habits and access their pension pots early in an attempt to better guide their children and grand-children during their formative years.
A third of the respondents said that during their lifetime they will be obliged to invest anywhere between $30.000 and $120.000 per child in order to ensure their necessary educational and living expenses.
“Today’s parents are confronted with a wide array of financial dilemmas that have a direct impact on their savings” said Frank Votaw, Chief Operating Officer of Voth Nixon Group. “Our advisors have noticed a rising number of clients facing the challenge of having to financially support children that cannot afford property payments or other living expenses on their own, so much so that even grandparents are now contributing to help cover these costs”.
The findings show the emergence of a concerning trend amongst parents in their 30s and 40s, most of them not being able to benefit in the future from the same pension pots that their parents enjoyed and having to make a radical decision between a comfortable retirement and providing for their children’s financial needs. “Professional advice and future planning are taking center stage and are practices that we encourage parents to consider before sacrificing a large part of their pension funds” Mr. Votaw added.
Over a third of the questioned parents are positive that providing for their children’s financial requirements will impact their future way of living, with 18% determining they will have to retire at an older age in order to compensate for lower pension pots, which in turn fuels the problematic issue of income sources during retirement.
36% of parents anticipate that on average they will have to allocate around $100.000 per child to ensure satisfactory living conditions, tuition fees and other costs such as transportation, nutrition and leisure activities, not taking into account the 12% that would solicit financial assistance from their own parents if needed. On top of that 8% of parents believe they will have to take on riskier investments in pursuit of higher profits in order to attenuate the financial burden placed on their household.
“Accessing pension funds earlier than expected with the goal of ensuring a child’s development represents a real risk for parents, no matter how well intended they might be. This is an issue which primarily arises due to insufficient or late planning, with almost two thirds of parents not considering the issue until their children’s teenage years. A way to counteract this phenomenon is by setting up savings accounts for children at earlier ages, which will allow parents to raise the necessary funds over a longer period of time with minimal contributions, seeking professional advice, whether it relates to managing said funds or supplementing them with smart investments, and educating the younger generation on crucial financial matters, thus ensuring a more efficient manner of managing expenses and reducing the occurrence of irresponsible spending” concluded Mr. Votaw
About Voth Nixon Group
VOTH NIXON GROUP is a global asset administration group, managing capital for both institutional and retail investors across the world. Our aim is to provide solid fund performance across various asset types in which we know we have a viable competitive edge. At VOTH NIXON GROUP your goals are important to us. We understand the financial challenges that make it difficult to achieve your targets, and we’re qualified to provide the assistance you need. We believe your financial progress, regardless of your present situation or economic condition is achievable.
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