Bank of Mum and Dad tightens belt to help kids on the ladder
One in five parents and grandparents aged over 55 admit they are accepting a lower standard of living so they can help their loved ones onto the housing ladder, according to Legal & General.
In the 55 to 64 age bracket this rose to 27%.
Worse than simply being worse, off, one in 10 actually feel less financially secure and 4% even postponed retirement after supporting family or friends to buy a home.
Based on the average contribution by The Bank of Mum and Dad, an over-55 household would be £18,000 worse off after providing financial support.
Despite the cost, thousands will still help their loved ones onto the ladder using pension savings or income in 2018, with over 50,000 transactions partly or wholly funded by those cashing in their pension pots to provide a lump sum for a deposit and nearly 23,000 supported by individuals using their annuity income.
ALmost 44,000 housing transactions were supported by equity release, nearly double the number using annuities and over twice as many as those relying on taking out a loan.
Chris Knight, CEO at Legal & General Retail Retirement, said: “The Bank of Mum and Dad continues to play a major role in the housing market, but the support many people provide is leaving them feeling the pinch as they approach retirement.
“This generation is helping family or friends onto the housing ladder, but they don’t necessarily have the wealth to do so without impacting their own retirement plans, and they should get advice to make sure this won’t leave them short of funds.”