20 May 2022, 08:42
Renewed dependence on the Bank of Mum and Dad as the cost-of-living crisis bites
London, 18 May 2022 – The cost-of-living crisis is leading to further dependence on the Bank of Mum and Dad, following an extended period of support given during the pandemic, according to new research from Saga Equity Release.
In October 2020², 1 in 5 of parents said they were helping their adult children financially. Almost two years on, this support has intensified. Today, 1 in 4 say they will be providing financial support to their adult children over the coming months. And a similar proportion expect to still do so in a year’s time.
The majority (64%) of parents also expect the current cost of living crisis will have a greater impact on their adult children’s finances than Covid-19. This is because of rising bills, a lack of savings, and increasing rent or mortgage payments.
As a result, 1 in 4 also expect to support their children more than they did during the pandemic.
Economic uncertainty leading to changing views on inheritance
The events of the last two years have caused many over-50s to revaluate their inheritance plans and think more flexibly to support their families:
- 1 in 4 (24%) say the cost-of-living crisis has changed how they plan to share their estate with their family – rising from 21% due to the pandemic.
- 12% of over-50s gifted away money during the Covid-19 pandemic.
- 15% now expect they will do so at some point during the current cost-of-living crisis – an average of 9% of their estate.
- Over a third (34%) also say they are now more open to different types of inheritance, with the same proportion who want to see their children benefit from it before they die.
The research also suggests that 5% of parents aged over-50 are also now considering equity release, rising to 13% for those aged over 80, with the main reasons being to release funds to support family, and as a result of the cost-of-living crisis.
According to Saga’s own data, the average amount of equity drawn down by its equity release customers has risen by 12% since 2020.
Alex Edmans, Head of Retirement, Saga Personal Finance, commented: “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.
“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.”
Notes to editors
NOTES TO EDITORS
¹ Survey data based on research conducted by Opinium in April 2022 (2,000 respondents aged over 50 with children over the age of 18)
² Survey data based on research conducted by Opinium in September 2020 (1,464 respondents aged over 50 with children over the age of 18)
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Saga is a leading provider of products and services primarily tailored for customers over the age of 50 in the UK. The Saga brand has been carefully developed over the past 60 years to become one of the most recognised and trusted brands among UK consumers aged over 50. Saga is synonymous in the UK with the over 50s market and is recognised for its high-quality products and services. These include cruises and holidays, home and motor insurance, savings and equity release and the UK’s award-winning Saga Magazine.
Saga Equity Release is provided by HUB Financial Solutions Limited.
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