One in four over-50s have gifted cash to family: Helping with house deposit most common reason

One in four parents over the age of 50 has made a significant monetary gift to their family in the past five years, it has been found.

A total of £38 billion was donated to help loved ones, according to research by life insurance company SunLife.

Of those who gave money, the most common reason was to help their children buy a home. About 26 per cent of donors did so for this reason, contributing an average of £26,680.

The SunLife survey also found that the vast majority of those over 50 who helped their families financially said donating cash resulted in an increase in their own overall happiness.

Of those who gave a cash gift to help their children or grandchildren get up the housing ladder, 76 percent reported an increase in their own happiness.

And of that group, 71 percent said it significantly improved their happiness, while the remaining 29 percent said it was “somewhat improved.”

The fact that giving cash improves the overall happiness of people over 50 is also reflected in their attitudes about whether they’d rather give money now, or make sure they leave something behind when they’re gone.

Releasing a portion of a home’s equity allows older homeowners to share their assets with their children

SunLife said half of those over 50 – 49 percent – would like to leave a legacy to their families after they leave, and 10 percent said they would even cut back on retirement spending to ensure they could leave a legacy.

However, 46 percent are more interested in their money being spent while they are alive, with 27 percent choosing to spend it to enjoy retirement – even if it doesn’t involve an inheritance – and 19 percent preferring to have a to give early inheritance. they can see how their loved ones spend the money.

Of respondents who released shares, 12 per cent said they released the money to provide financial support for family – an average of £12,525.

Equity release offers homeowners over the age of 55 the opportunity to access a portion of the money tied to their home to help with demands on their finances, such as debt repayment or home renovation.

Equity releases have had a bad reputation in the past after clients took “serious” financial hits. The industry has been criticized for encouraging people to go into debt, especially later in life.

There have been other concerns about equity release, such as clients going into negative equity when the value of a property falls below the loan taken out for it when home prices fall.

In the past, clients have also gone wrong with the fine print on their equity release loans when it comes to prepayment penalties — such as couples having to pay an exit fee unless they both have to go to care.

Collecting a deposit is an obstacle to getting up the housing ladder, with more and more first-time buyers having to rely on financial help from older generations

SunLife asked those who have not taken an 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, averaging £32,097 in total. A further 15 per cent said they would spend it on family gifts, which would cost them £20,600 on average, and 10 per cent said they would spend it on financial support for the family, amounting to an average of £38,808.

Of those who have taken stock releases, 13 per cent say they spend some of the money on family gifts – an average of £4,043 – and 7 per cent on early inheritance – an average of £11,100.

SunLife’s Ian Atkinson said: ‘It is clear that helping the family financially is a priority for many, be it early inheritance or more specific support such as help with a down payment to buy a house – and this is especially true for those who retired, with 29 percent of retirees having given a significant amount of money to family in the past five years, compared to 22 percent of employed people over 50.

When asked about their top financial concerns, more than a quarter of respondents said they are most concerned about how their children and grandchildren are doing financially – rising to a third of retirees.

This suggests that making sure loved ones don’t struggle financially is a major factor in why so many over-50s donate cash to their families. Many are even willing to risk their own financial stability to help.”

He added: “Twelve percent of those who released equity from their home did so to provide financial support for family, while 10 percent said they would cut back on their own expenses after retirement to ensure they have a heritage.

‘However, there is another important driver: happiness. They say giving is better than receiving, and our report backs that up. Three-quarters of those who helped their children or grandchildren buy a house said it improved their overall happiness.’