First published in the Australian on 12 May 2025

By Anthony Keane

The Bank of Mum and Dad is at increasing risk of collapse amid soaring living costs and a culture of entitlement in some families, where children claw into baby boomer wealth.

Financial specialists say that seniors should put their own finances first, including contingencies for health, retirement living and aged care, as Australia's $3.5 trillion wealth transfer kicks off.

An anticipated $35bn is expected to be transferred from parents to their children.

A new report by Acenda, formerly MLC Life Insurance, says conversations on transferring wealth before death must consider unplanned situations such as health and relationship breakdowns, and retirees' risks need to be managed.

Acenda partner education manager Marshall Ross said Australian Bureau of Statistics data showed that the number of people turning 65 was peaking, and the surge of financial support from parents showed a shift in thinking, with money being transferred to children earlier than in the past.

"It's a symptom of the economic circumstances that a lot of younger people find themselves in," he said.

"I think it's unreasonable to expect people to make calculated rational decisions about money when it comes to their family and their kids."

Mr Ross said that many parents were conflicted between wanting to help and still being able to fund their own retirement.

He said 700,000 Australians intended to retire within five years, baby boomers held 49 per cent of the nation's wealth, and it was "absolutely" likely there would be increasing cases of the Bank of Mum and Dad going bust.

"It stems from a misunderstanding of the consequences of potentially large sums of money being lent on the proviso it will eventually be repaid," he said.

"People need to have frank conversations about what the risks actually are."

Mr Ross said that without managing risks, parents could potentially see their retirement expectations compromised or lose their homes.

JBS Financial Strategists managing director Jenny Brown said she was increasingly seeing adult children seeking money from parents – sometimes in manipulative ways – and "they have to remember that this is all the money that their parents will ever have".

"Kids in their 30s feel they are entitled to a share of the wealth that their parents have generated," she said.

"Parents need to make sure they preserve their wealth.

"It could be needed for healthcare, moving into a retirement village or aged care.

"There are all these what-ifs. What if it goes wrong? What if there's a relationship breakdown and there's no formal agreement in place with the kids?" she said.

"In a marriage breakdown, you can potentially lose 50 per cent of it to the kid's ex-partner. What if the kid has a business and goes bankrupt?"

Ms Brown said the Bank of Mum and Dad was Australia's fifth-largest lender, and parents should be mindful about handing children money.

"Seek advice, and make sure there is a very clear agreement in place with the kids," she said.

"Make sure you can afford it – are you anticipating getting it back or is it really a gift?"

Financial adviser and author of Money for Life Helen Baker said becoming the Bank of Mum and Dad was “a very emotional thing”.

"Understand what this means, how much you give, when should you give it and what structure should you use," she said.

Ms Baker said health issues were an increasing problem.

"A lot of people who plan to work to 65 to 67 are just not able to anymore," she said.

Some parents would face financial trouble, and going guarantor for children's loans could be dangerous.

"It can kind of have a domino effect... pretty much everyone's on the hook," Ms Baker said.

She said parents should seek specialist advice, sort out estate planning, have adequate insurance, an exit strategy and access to emergency funds.