Malaysia has fourth highest number of parents supporting adult children
Parents are spending a third of their disposable income to support their grown-up children and less on themselves to provide more for their families
By Adela Megan Willy
Malaysian parents ranked fourth in the world for financially supporting their children into adulthood, after the United Arab Emirates, Indonesia and Mexico, according to HSBC Holdings plc’s latest survey.
“The Power of Protection: Facing the Future” study found more than half or 57 per cent of those surveyed with children over 18, are still providing regular financial support to them. “This is despite most of the parents believe their grown-up children should stand on their own two feet financially,” said HSBC.
The study, conducted between March and May 2017, surveyed 1,000 people in Malaysia aged 25 and above from a nationally representative online sample. The study highlights parents’ ongoing commitments to their children, as well as the younger generation’s financial pressures.
HSBC said the study in Malaysia shows it is very common for parents to be supporting their children well into adulthood. “Almost half (50 per cent) of those supporting an adult child have been doing so. Education is where most parents (69 per cent) are providing financial support, while 41 per cent of them are helping with daily living costs such as utility bills, groceries and home repairs.
“They are also helping with medical and dental care (38 per cent) and rent or accommodation costs (27 per cent). Over one in four (29 per cent) are even helping to pay for holidays,” it added.
Most of the parents supporting grown-up children feel good about helping their family members, with 62 per cent feeling appreciated for the support they give to others and 63 per cent feeling they are a good provider for their family members.
The survey also found parents spending an average 33 per cent of their disposable income to support their grown-up children and 49 per cent are spending less on themselves to provide more for their families.
However, there are significant knock-on effects on parents’ long-term financial planning, added HSBC. “A total of 67 per cent of parents supporting adult children would prioritise paying for their children’s university or higher education over their own retirement fund, and 30 per cent had to withdraw from their own savings and investments to support an adult child, while 17 per cent have incurred more debt.”
Twenty-two per cent of the people supporting someone in their own family say their dependants would not manage at all financially if they developed a long-term illness or disability, if they had to significantly reduce their financial support for their dependents (16 per cent) or if they were unable to work (16 per cent).
Yet, 54 per cent of the parents supporting grown-up children do not have insurance in cases of a serious illness or an accident preventing them from working, and 52 per cent do not have life insurance.
HSBC Bank Malaysia Bhd country head of retail banking and wealth management Lim Eng Seong said due to rising costs of living, parents have greater burden when supporting their grown-up children.
“Planning for it would be a positive step for them. It is always important to have a financial contingency plan and it is never too late to check the options available to ensure one’s financial future is secure,” he added.
Based on the findings, HSBC highlights four measures to help families deal with future challenges — identify their priorities, assess their finances, plan for the whole family and discuss the future.