There will be an astonishing increase over the next decade in the number of people in their 60s who have children that are not yet 18. New research suggests that in just 10 years there will be 1 million such UK “parent-sioners”, compared to 400,000 today. While no one should question the ability of someone in their 60s to care for teenagers, the financial consequences are impossible to ignore.
The rise of the parent-sioner is inevitable given how many women are having children in their 40s. Last year the birth rate among women aged 40 and above surpassed that of women aged under 20 for the first time since 1947, according to the Office for National Statistics. Births to the 40-plus have more than trebled since 1981.
Until now, the period of your life when you are financially unhappiest is seen as between the ages of 45 and 55. These are the years when you have an expensive mortgage to pay down, kids that cost you a fortune and the upcoming cost of getting them through university.
Traditionally the over-55 period is when things calm down financially. It’s also the period when many people start shovelling their money into a pension (or maybe a buy-to-let) to take advantage of tax reliefs.
But as the trend to having children later in life continues – not least because getting on the property ladder while young is so much more difficult – it’s not really clear when and how this generation will be able to put anything extra into their pensions.
Seven in 10 parent-sioniers told a survey by mortgage company One Family this week that their finances are taking a hit. One in six (16%) said they are saving less toward retirement and a similar number, 14%, are dipping into savings as a result of having children later.
I’m surprised the figures are not higher. Maybe it’s because those now in their 60s at least got the benefit of buying houses when they were cheaper. One couple I spoke to this week, who had their first child when they were both in their mid-40s, said the crucial thing was that their mortgage was paid off by the time they hit their early 50s. This means they can downshift when they are in their 60s if they wish and release significant amounts of equity. They suffered few financial drawbacks from starting a family late.
Indeed there were significant advantages. Both had been able to pursue great careers, are in good health and, by the time they had children, they had already climbed the property ladder into a good-sized home. The only drawback they could see as parent-sioners was coping with teenage kids at the same time as caring for elderly parents.
Pity those coming up behind them. Many will have amassed significant student debt; currently the average is more than £30,000, and it is not finally written off until they are in their early 50s. They will have had to pay high rents, and if lucky (that is, born into a well-off family) be buying their highly priced first home at the age of 30, probably with a 30-year mortgage. Inevitably they will join the ranks of the parent-sioners as they delay starting a family.
This generation won’t just be worse off than their parents in many ways. They also look like the generation that will have to work well into their 70s to have any hope of financing their retirement.