Grown-up children needing financial assistance from parents have long been benefiting from the ‘bank of mum and dad’.
However, a new survey of 1,500 parents by pensions advice specialist Portafina has revealed they aren’t the only party looking for monetary assistance – elderly parents often need substantial support too.
The data revealed that 78% of parents are giving their children payments often totalling around £5,000 a year. For a quarter of respondents (25%) this was to cover unexpected costs such as large bills or car repairs. Just under a half (47%) of parents were gifting up to £1,000 each year for day-to-day living expenses.
It has also come to light that just over a third (34%) were generously bestowing £10,000 or more a year to keep parents ‘afloat’. 31% of respondents were helping their own parents with care home bills and day-to-day living costs, whilst 19% were helping them to remain on the property ladder.
Overall, it was revealed that children receive small but regular payments or irregular larger payments, whereas elderly parents require bigger sums on a fairly continuous basis. When larger donations are sought by children for big expenditures, the data highlighted a greater willingness for parents to pay for a wedding over a house deposit (17% versus 15%), despite the average sum required being very similar - £30,0002 and £33,0003 respectively.
Harry Lawton, 57 from Leeds said: “My wife and I have two grown-up children in their late 20’s who regularly need our help with small bills and unexpected costs like car repairs. On top of this we’ve also recently had to start covering the care home fees for my wife’s dad who can’t be left alone for long periods of time (we don’t live close to check-in on him daily).
“We have always put a bit of money away for ‘rainy days’ and we expect to support our children from time to time, but there are months when we find our funds seriously stretched.
“We do worry about how long we may need to offer this financial support, and the impact it could have on our own available funds later in life”
Jamie Smith-Thompson, managing director at Portafina, said: “Whilst 37% of parents surveyed had planned to support family financially, a sum of up to £15,000 a year is likely to make a big dent on most people’s savings.
“The practice of financially subsidising grown children is as widespread as ever. What is surprising is this new, secondary pull on finances from elderly parents.
“Supporting family whilst juggling your own cash is a challenge for anyone. What every generous donor should remember is not to compromise their own planned financial security during retirement years. With so many adult children still needing financial help, there’s every chance they won’t be able to offer similar support to their parents down the line. Putting yourself first is not something to feel guilty about, it’s simply common sense.”
Find out more about Portafina at portafina.co.uk