One in four parents over 50 years old have given a significant cash gift to their family in the last five years, it has been revealed.
A total of £38billion was gifted to help loved ones, according to the research by life insurance firm SunLife.
Of those who gave money, the most common reason was to help their children buy a home. Some 26 per cent of gifters did so for this reason, contributing £26,680 on average.
One in four parents over 50 years old gave a significant cash gift, to help their children onto the property ladder
SunLife’s study also found that the vast majority of over-50s who have helped out their family financially said gifting cash resulted in an increase in their own overall happiness.
Of those who gave a cash gift to help their children or grandchildren get onto the housing ladder, 76 per cent reported an uplift in their own happiness.
And of that group, 71 per cent said doing so significantly improved their happiness, with the remaining 29 per cent saying it had ‘slightly improved’.
The fact that giving cash improves overall happiness among people over 50 is also reflected in their attitudes around whether they’d rather gift money now, or ensure they leave something behind when they have gone.
Releasing some of the equity in a property can help older homeowners share their wealth with their children
SunLife’s said half of over 50s – at 49 per cent – would like to leave some inheritance to their family after they had gone, with 10 per cent saying they would even cut back on retirement spending to ensure they could leave an inheritance.
However, 46 per cent are more interested in their money being spent while they’re alive, with 27 per cent choosing to spend it on enjoying their retirement – even if it means no inheritance – and 19 per cent preferring to give an early inheritance so they can see their loved ones spend the money.
Of those respondents who have taken out equity release, 12 per cent said they released the cash to provide financial support to family – £12,525 on average.
Equity release allows homeowners over 55 the option to access some of the cash tied up their homes, to help with demands on their finances such as debt repayments or home renovations.
Equity release has endured a poor reputation in the past after customers suffered ‘severe’ financial knocks. The sector has been criticised for encouraging people to take on debt, particularly later on in life.
There have been other concerns about equity release, such as customers falling into negative equity where the value of a property is less than the loan taken out against it when house prices fall.
In the past, customers have also fallen foul of the small print on their equity release loans when it comes to early-redemption penalties – such as couples who must pay an exit fee unless both of them need to go into care.
Raising a deposit is a barrier to getting on the housing ladder, with increasing numbers of first-time buyers having to rely on financial help from older generations
SunLife asked those who haven’t taken out equity release, but would consider it, what they would spend it on if they did.
The survey found that 17 per cent would spend at least some of the money on early inheritance, totalling an average of £32,097. Another 15 per cent said they would spend it on family gifts, costing them an average of £20,600, and 10 per cent said they would spend it on financial support for family, giving an average figure of £38,808.
Of those who have taken out equity release, 13 per cent report spending some of the money on family gifts – an average of £4,043 – and 7 per cent on early inheritance – an average of £11,100.
Ian Atkinson, of SunLife said: ‘It’s clear to see that helping family out financially is a priority for many, whether it be early inheritance or more specific support such as help with a deposit for buying a home – and this is especially true among those who retired, with 29 per cent of retirees having given a substantial cash gift to family in the past five years compared to 22 per cent of working over-50s.
‘When asked about their biggest financial concerns, more than a quarter of respondents said they were most worried about how their children and grandchildren are managing financially – rising to a third of retirees.
‘This suggests that ensuring loved ones are not struggling financially is a major factor in why so many over-50s are gifting cash to their families. Many are even prepared to risk their own financial stability to help out.’
He added: ‘Twelve per cent of those who released equity from their homes did so in order to provide financial support to family, while 10 per cent said that they would cut back on their own spending in retirement in order to ensure they could leave an inheritance.
‘However, there is another key driver here too – happiness. They say giving is better than receiving, and our report would support that. Three quarters of those who have helped their children or grandchildren buy a house said doing so improved their overall happiness.’
