Tweet
Millions of parents have been pushed into debt or had to cut back on their savings because they have continued to act as the "bank of mum and dad" for their adult children or grandchildren, it was claimed today.
The levels of financial help are so large that a substantial proportion of the younger adult proportion will never get the savings habit, according to Scottish Widows.
More than half the 20.7m Britons with children over 16 have given or loaned their offspring an average of £11,776 so far, it said, and nearly half those think they are likely to be handing over another £12,564. Most of those who have splashed the cash on their children have had to dip into their savings or investments to make the loan, while about one in six (nearly 2m people) have increased their own levels of debt.
Scottish Widows based their figures on an online survey of nearly 6,000 parents with adult children, commissioned by YouGov. The pensions and investment company's third annual savings and investment report estimated the amount households had given their children had gone up from £67bn this time last year to £72.5bn. But it conceded it had not asked parents to differentiate between amounts they had loaned and given their children, nor whether they expected any of the money back.
It was also not clear whether some parents regarded private school fees as a gift or loan, nor were parents asked how they had financed the extra debt where it was incurred. Only 5% of those questioned said they had remortgaged their property.
Retirement money
The survey suggested that nearly half of the parents who loaned money did not believe they would be able to replace it. More than a third said they would probably otherwise have used the money in retirement.
The biggest reason for handouts, given by 38% of those questioned, was to help younger generations pay off their own debts. Money towards a car was cited by 35%, and help buying or finding a deposit for a home by 30%. Nearly a quarter said they had helped with living expenses and spending money, 16% with education fees, and a similar amount with education expenses such as trips and books. Help with travel expenses (11%) and investment or money to start a business (4%) also attracted help.
Parents said they had helped out younger generations on three or four occassions on average, although 4% of those questioned said they had last helped out more than 15 years ago.
Gordon Greig, head of savings and investment at Scottish Widows, said: "When times are as tough as they currently are, this is the last extra burden parents need. Whilst some parents have prepared for this financial handout there are some who won't be in the position to replace these savings.
"Not only does this leave parents vulnerable to any unforeseen circumstances such as salary cuts or job losses, it can also affect them in retirement, meaning they have to work longer or make their retirement savings stretch further."
Greig added: "It is questionable whether the current younger generation of adults will ever learn the necessary savings habit if their parents continue to bail them out in this way."
guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds
More...
Comment