Over-55s cut living standards to help family buy a home
Families are being helped on to housing ladder
Thousands of over-55s are are now prepared to accept a lower standard of living to help their family onto the housing ladder, according to new research.
The average payout to offspring from savings and pensions has risen by more than £6,000, to £24,100, meaning that the Bank of Mum and Dad is now the equivalent of a top 10 UK mortgage lender, gifting a total of £6.3 billion in 2019.
Research from financial services group Legal & General and Cebr has revealed that many people could be accepting a more uncertain retirement after financially supporting family members to buy a home.
It shows they are drawing on a wide range of sources to financially support other family members with a deposit. Although more than half are using cash (53%), 9% are cashing in lump sums from their pension savings, 7% are using their pension drawdown and 6% are drawing on their annuity income to help support their loved ones’ homeownership ambitions.
But over a quarter (26%) of BoMaD lenders are not confident they have enough money to last retirement after helping their loved ones and 15% have had to accept a lower standard of living. A small number (6%) are even choosing to postpone their retirement.
Unlocking housing wealth with equity release is becoming more popular with the over-55s and many are now using the money to help with a deposit.
Other findings from this year’s research included:
- Over-55s are increasingly aware of the benefits of equity release – just 8 out of more than the 1600 respondents said they had never heard of it
- Men are more than twice as likely to postpone retirement (9%) after helping family or friends on to the housing ladder than women (4%)
- Women are significantly more likely to be concerned that they don’t have enough money to last retirement (32%) than men (18%)