‘Generous Generation’ helping families survive squeeze

As the rising cost of living tightens household budgets, more and more families are turning to the older generation to lend them a helping hand.

The over-50s share an average of about £500 a month to support their children and grandchildren, according to findings from savings provider Unity Mutual.

About half have looted their own savings to support their children with a home security, home repairs, or day-to-day living expenses.

Unity Mutual’s Ben Pears says, “We’ve called this generation the Generous Generation. Having children is, of course, a lifelong commitment, but more than half of parents over 50 told us they didn’t expect to contribute at this age.’

Wealth & Personal Finance talks to parents and grandparents about how they manage to finance their family.

I help with childcare… but my pension will suffer

Jill Haigh, 57, from Lancashire, works part-time to care for her four grandchildren aged 2 to 13. younger two can’t go to the nursery.

“My daughter Hayley and her husband Jack work full-time, so I’ve decided to stay part-time so I can support my daughter and grandchildren,” says Jill, a mother of two.

“It’s a huge sacrifice to myself. I would prefer to work full time, because then I can contribute more to my pension. But I love them and want to help where I can.’

Jill cashed in part of her retirement two years ago to buy a two-bedroom cottage where she lives with her partner and son. But because of her age and reduced income from working part-time, she was unable to get a mortgage. She made a ten percent down payment, but the loan is in her son’s name, because mortgage lenders were only too happy to lend him.

“It’s not ideal, but the upside is that we can all contribute to bills and mortgage payments, which reduces costs,” she says.

According to official data, about 25 percent of working parents depend on grandparents for childcare. Grandchildren can enjoy time with grandparents, while parents save on childcare costs, which can easily exceed £1,000 a month for a full-time nursery.

“Now that I’m retired, I’m worried about money,” Jill adds. “Many of my friends own their homes and take cruises and vacations abroad.

‘I should work full time to make myself more financially secure, but I want to support my children. It’s so hard for young parents now, with high childcare costs and other costs.’

I built a room for my son… in the garden

Reginald Smith, 80, has released funds from the value of his three-bedroom home in north London to help his three adult children with their finances.

He is one of a growing number of people over 50 who are passing real estate on to younger generations. According to broker Savills, people over 50 own almost 80 percent of all home assets, while 40 percent of 20 to 34-year-olds own none.

Reginald, who runs a specialty pet food business, raised £665,000 from the value of his home using equity release. He bequeathed about £100,000 to each of his children, all in their 40s, and used the remainder to pay off his existing mortgage and make improvements to his home.

Helping Hand: Reginald Smith used equity release to build his son a garden room

Equity release is a lifetime mortgage on your home. Smith arranged his loan through the Key Group lender in later life. The loan represented about 40 percent of the value of his home and has an interest rate of 4 percent.

The interest is rolled up along with the loan and will be repaid by Reginald’s estate upon his death, or by foreclosure of the house if he has to move into a care or sheltered home.

“Equity release isn’t the perfect solution because you’re tied down,” he says. “But it allowed me to give some money to my three children. My two daughters used it to lower their own mortgages and make home improvements, while my son invested some of his money in a student housing company in the US.” Reginald has a son, 41, who lives at home. With the money that became available, he had a room built at the end of the garden to give the two their own space. He has also paid off his mortgage, which has boosted his monthly income.

The widower also hopes that by making gifts to his children now, he can reduce the inheritance tax assessment upon his death. That’s because gifts don’t pay tax if the giver lives seven years after making them.

I put aside € 25 per month for my grandchildren

John Mills, 77, from Brighton, has three daughters and six grandchildren. He is setting aside £25 a month for every grandchild since the eldest was born almost 18 years ago. The money is held through individual naked trusts, which grandchildren can access once they turn 16 in Scotland and 18 elsewhere in the UK.

“I’ve been lucky enough to have some extra income to save for my grandchildren,” says John, who is retired and used to working in back-office operations for a construction company.

“I’ve done the same for everyone, but the final amounts will vary as the money is invested, so there’s no certainty. The amount will not be life-changing, but it can help with the costs of the university or be used for a home of your own.’