Twice as many UK grandparents are providing regular financial support to their adult grandchildren when compared to those children’s parents (13% vs. 7% of parents), according to new research from customer-owned financial services company, OneFamily.
The OneFamily report found that most of these grandparents’ also provided this support on a no-strings attached basis (73%). This generosity appeared to be driven by concerns for the millennial generation’s financial future, with seven in ten grandparents (69%) worried that their younger loved ones would find it harder to get on the property ladder than they did themselves. As a result, one in 10 UK grandparents (10%) have given their adult grandchild a significant cash lump sum of £15,000, on average with nearly half (42%) of these donations from grandparents being used to help their grandchildren on to the property ladder.
These fears reflect recent figures from the Office for National Statistics (ONS) showing that house prices have grown much faster than income. Properties are now 7.6 times the value of an average annual wage compared to half that twenty years ago (3.6 times on average) and property prices have also soared during the same period. In 1993 the average property sold for £62,333 compared to £247,000 today.
The next most popular reason for grandparents to donate a lump sum was to pay off debts (23%), suggesting grandparents are also helping to support younger generations through university, with the average cost of studying now exceeding £23,000 per year. When it came to regular payments from grandparents, again one of the most popular reasons was to assist with the ongoing cost of education or training (25% of all regular payments), followed by paying for a holiday (21%) and simply helping with monthly bills (20%).
This shift in financial caretaking for the younger generation follows recent research from independent think-tank the Resolution Foundation which found that grandparent households are holding an increasingly large amount of total UK wealth. In fact, in 2017 pensioner households have a larger percentage of wealth than working households for the first time since official figures began, with pensioners now £20 a week better off than typical working households.
Grandparents are most likely to fund this financial help from their own savings (40%); however, the majority of kind-hearted contributions did not require any sacrifice to the grandparent’s own financial well-being (71%). This demonstrates that many of the older generation are able to provide this support without impacting their own lifestyle.
Georgina Smith, Managing Director of Lifetime Mortgages at OneFamily said “For many throughout the UK, grandparents are seen to be the backbone of family life, supporting family members whenever they can, be it financially or by giving up their time for childcare and generally helping out busy working families. We expect parents to provide their children with support, but our research highlights just how important the contributions of grandparents are. As the cost of living squeeze continues and buying a property feel more unachievable for members of the younger generation, it seems the nation’s nans and grandads are stepping in.”