There’s an expected pattern to our lives that doesn’t always prove to be true.
We’re born, we go to school and grow up, we work hard our entire lives, start a family, watch them leave home to start a family of their own, and then we move to a smaller property to enjoy our retirement. However, this often isn’t the case, with adult children leaving home not always prompting a change in our own home ownership.
Recent research from Lloyds Bank has found that almost half of ‘empty nesters’ across the UK have no plans to downsize when their children have ‘flown the nest’. In fact, they found that 45% plan to stay put in their current property when the kids leave home.
Just because you are staying in your home when you become an empty nester, it doesn’t stop the children flying the nest from having a positive impact on your life. Lloyds Bank found that nearly two-thirds of parents in this position are enjoying the newly found space (who can blame them?!) and taking joy in rediscovering their independence.
The research also found that 41% of empty nesters are better off financially as a result. Whether or not you decide to charge board to your adult children living at home, the cost of having more adults living under the roof can be difficult to quantify – until they move out.
Whilst many parents will ask their adult children to contribute to housekeeping costs, others choose to waive this board, so their children can save more quickly towards a deposit to buy their own home. But when the kids move out, many costs disappear overnight, resulting in the parents having more to spend on themselves.
This spare cash can be allocated to realising financial goals, such as travelling. The survey found that 31% of empty nesters have been able to travel more since their children moved out and 6% had the opportunity to pursue a lifelong dream.
The newly found freedom is also beneficial for parents who are grandparents, allowing them to spend more quality time with their grandchildren. In fact, 37% of empty nesters said it allowed them to enjoy more time with their grandchildren.
One concern we hear from our clients who have adult children living at home is that, when they move out, they won’t be able to enjoy their newly found status as an empty nester. If this is a concern, you might find some reassurance that only 26% said they don’t enjoy being an empty nester; the vast majority do enjoy this new found status!
Andy Mason, Lloyds Bank mortgage products director, said:
“Contrary to the belief that this time in a parent’s life is lonely, a lot of empty nesters are now enjoying life since their kids have flown the nest by being able to travel more and chase lifelong dreams.”
Gaining empty nester status could turn thoughts to downsizing to a smaller property, as you no longer need all of that space and spare bedrooms. However, strong ties to the community will often mean you have no intentions of moving out of the area. Others choose to stay put because they don’t need to downsize in order to release capital for living expenses in retirement.
On the subject of downsizing, we would encourage anyone considering this, to factor it into their financial plan as an option to consider. Rather than charging headlong into a downsizing decision, or dismissing it entirely from your list of options, it can be reviewed sensibly from a financial perspective to understand what it would mean for your personal finances in later life.
For those who do decide to downsize, the financial windfall can be significant. Lloyds Bank reported that, when downsizers move from a detached three bedroom house to a flat or bungalow, the average amount of equity released from the property sale is £109,656.
Furthermore, living in a smaller property is also likely to reduce ongoing costs, such as council tax and utility bills.
If you find yourself becoming an empty nester, please do give us a call to discuss your options and find out what this means for your personal finances and financial future.