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Cost of living crisis will increase dependence on Bank of Mum and Dad – Saga Equity Release

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  • 18/05/2022
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Cost of living crisis will increase dependence on Bank of Mum and Dad – Saga Equity Release
Parents are increasingly expect to financially support their children due to the cost of living crisis, with equity release potentially becoming a more attractive option.

A quarter of parents with adult children said they would be supporting them in the coming months, according to a survey of 2,000 people by Saga Equity Release.

Up from 20 per cent two years ago, the current proportion is expected to stay stable over the coming year.

 

Cost of living crisis has greater impact than Covid

Around 64 per cent of parents said they expected the cost of living crisis to have a greater impact on their children’s finances than the pandemic, pointing to rising bills, low savings, and increasing rent and mortgage payments.

The report adds that a quarter of respondents expect to support their children more now that they did during the pandemic.

The pandemic and the cost of living crisis has led to many over-50s reevaluating their inheritance plans, Saga said.

 

Equity release

Saga reports that under a quarter, 24 per cent, of respondents said the cost of living crisis had made them reconsider their plans to share their estate with family.

Around 15 per cent said the cost of living crisis could lead them to gift money, compared to the 12 per cent who gifted money during the pandemic. The average gift is nine per cent of their estate.

Five per cent of over-50s were considering equity release, which rose to 13 per cent for those aged over 80.

The amount drawn down by equity release customers has also increased by 12 per cent since 2020.

Alex Edmans, head of retirement at Saga Personal Finance, said: “The last two years have been unparalleled in terms of the impact on our finances, with further challenges on the horizon.

“The Bank of Mum and Dad was a critical lifeline for many people during the Covid-19 pandemic, and our research points to a growing dependence on family support as inflation continues.”

He added: “As dipping into savings or investments becomes less realistic in the cost-of-living crisis, more parents are now considering different approaches to inheritance – be that fast-forwarding plans, gifting sums of money or releasing equity from their homes. We could see permanent changes to attitudes towards inheritance as a result.”

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