Emerging Trend: Parents Saving for Kid’s Retirement

As a parent, it's likely that you have the wellbeing of your child in mind and want them to be as looked after as best as possible, both now and in the future. As a financial information platform, we were intrigued to find out what parents are most likely to save for and why.

In the quest to gain invaluable insight into family saving trends, we surveyed 3,000 American parents and discovered a number of reasons for their savings goals, from vacations to helping their kids on to the property ladder. 

Emerging trend: Parents saving for kid’s retirement as living costs & life expectancy age rise

One of the more interesting results of the research however, was an increasing trend in parents saving for their child’s retirement, with 12% citing offspring retirement as a reason for saving, a 9% increase since 2015.

Saving for their child’s education is still the number one reason for parents to think more about budgeting, although interestingly, the percentage dropped from almost 3 in 5 in 2015 (58%) to less than half in 2020 (45%). 

This may seem surprising, however as of 2019, 66% of US adults who spent $20,000 - $35,000 felt that their degree was not worth the money, while 100% of those who spent $200,000 - $250,000 felt the same*.

The decreasing value associated with a college degree could be a contributing factor to the drop in the number of parents willing to put money aside for their child’s studies. .

In 2019, almost half of Americans (45%) stated that their disposable income was just enough to cover daily expenses**, and as of today, 16.9% of the American population is now in the 65 years and older demographic, this is more than double the figure from 1950***. 

goalry-key

Welcome to the Goalry Mall

One place to reach all financial goals

GET MEMBER KEY

The age of retirement to receive full benefits has already risen from 65 to 67 for anyone born after 1960, however, economists predict that number could rise even more by 2050****. Out of those in the 65 and older age group, 13% of non-retirees have no savings whatsoever, with only 45% feeling prepared for their future financially*****. 

The consistent rising cost of living and increasing life expectancy and retirement age could be a growing worry for parents, and might be a direct contributing factor to why more parents are taking money from their own pockets and putting it towards their kids’ (albeit very distant) future..

Aside from worrying about how their children will live as they grow older, the survey seems to suggest that parents are also worried about where their children will live. Almost 1 in 5 parents (17%) claimed to be saving to help their child buy a house, compared to just 11% in 2015, which isn’t necessarily a bad idea considering house prices grew 5.7 % YoY in Jun 2020, following an increase of 5.8 % YoY in the previous quarter******.

Ethan Taub, founder of Goalry.com, says,

“The results of this survey are incredibly surprising and interesting, the fact that more people are saving for their child’s retirement and less are saving for a college fund compared to just five years ago, indicates a reshuffle in priorities. It’s not hard to connect the dots and hypothesise  that the current economic climate will be impacting parents’ decisions, and how they can best support their children, it will certainly be interesting to see if this trend continues to gain traction over the next few years!”

“Circumstances like these are part of the reason we help people manage their money in a way that achieves their personal goals; whether that is to stay on top of any important payments with Billry.com, or knowing where to save and where to spend with Budgetry.com, our aim is to make navigating finances as easy as navigating a mall.”

Liked this survey? Leave a comment down below and let us know what you think about this trend! If you’re interested in more fun and educational financial topics - join the Goalry family. Learn all about personal finance and set yourself up for financial success.

Save MoneyKevin Strausslong term savings goals, money goals, retirement goals, savings accountsComment