Jim Duffy comment: Bank of Mum and Dad is paying out constantly

Many parents will have to subsidise their kids as their salaries don't cut the mustard, says Duffy. Picture: Ian Howarth.
Many parents will have to subsidise their kids as their salaries don't cut the mustard, says Duffy. Picture: Ian Howarth.
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YouTube and a quick search of the internet provide truly entertaining viewing.

As I scanned the business pages in the USA, up popped a terrific two-minute video that provided the evidence I needed for my gut feeling – that despite having two 20-something daughters in work, we will have to pay for them for the next ten years at least. Why?

Well, the jobs – and specifically the salaries offered – just do not allow them to make ends meet in 2019. This has far-reaching ramifications for those of you planning your retirement, or who are about to retire.

The video clip in question focuses on an interaction between the JP Morgan Chase chief executive Jamie Dimon and Democratic Congresswoman Katie Porter last week at a House Financial Services Committee hearing. Dimon, who it was stated earned $31 million (£24m) last year, was asked how a junior employee ­earning $35,070 (£26,800) a year could live ­adequately. The Congresswoman outlined average and reasonable expenses covering rent, car, childcare, food etc… it transpired that the junior employee was living in a $500-plus deficit each month. In short, the salary was not enough to make ends meet. Notwithstanding the large pot Dimon attracted, this issue brings into focus the reality for so many parents these days in the UK who will have to subsidise their kids as their wages don’t cut the mustard.

It is easy to blame the “snowflake” generation for not working hard enough or not working two jobs to get ahead. But, to be fair to them, general living expenses have never been higher. A salary of £22,000 means that the person earning it is essentially living from month to month just to get by.

Granted, I worked two jobs and saved all I could for house purchase deposits. But, my deposit was a mere £3,000 20 years ago. Simply buying a starter flat these days requires around £20,000. Ask the average Generation Y or Z how they intend to save for this and the answer will not be a positive one. Enter the bank of Mum and Dad…

Research carried out in the USA revealed that more than half of adults between the ages of 21 and 37 are receiving financial help from a parent or guardian. One-third of those polled were still getting money from their parents every month to cover expenses such as petrol, rent and of course cellphones. This is a picture that many of you will recognise. And it means your decision making pre- and post-retirement may have to take into account your offspring and keeping their heads above water.

Only this week, I had this same dilemma. Like many older men with diminishing libidos, low testosterone and greying hair, I felt that a small sports car would perk this up a bit. Nothing too fancy, mind. No need for a brand new Porsche 911 GT. No, I would only require a six year old Mazda MX-5. Sub-ten grand and cheap to run. Plenty for sale on Autotrader, so no issue finding one. But, then I had to stop. As, like many of you, this would be a weekend luxury item that I do not need, only want. Could I justify this expense when I know that both my daughters are, as they continually tell me, “skint, Dad”? Could I really fork out cash on a whim, while they were struggling and at some point will need house deposits etc?

This, while anecdotal, is a fact of life for so many potential and current retirees. Having worked hard all their days, there was always the expectation that when offspring have flown the nest, if in fact they ever did, there would be some time and money for a few wee luxuries.

But, more and more, the reality is that 20-somethings and even 30-somethings are struggling and will need financial input from their parents. That’s you and me.

So, while it may not sound all that appealing, parents nowadays have to factor in looking after our kids in our retirement. I’ve renamed a line in my spreadsheet “kids” instead of “sports car”. This is reality in 2019 and it won’t get any better over the next ten years.

Jim Duffy MBE, Create Special