86% of grandparents have given cash and loans to their grandchildren since 2012, according to a new study.
Cast aside the Bank of Mum and Dad - according to a new study grandparents are offering increasing financial support to their grandchildren.
Most grandparents gave an average of £30 a month to their grandchildren, while some surveyed had given as much as £50,000 to help out with debts or help fund getting on the property ladder. 52% questioned in the study by LV=’s retirement division said they were planning to give financially to their grandchildren within the next five years, at an average amount of £1,000.
Among the grandparents surveyed, 75% had dipped into their savings to help out a grandchild within the last year. Over the last five years, 17% had made a contribution towards a child savings account or trust fund. Aside from saving for the future, 47% of grandparents gave their grandchildren pocket money, with 15% giving regularly.
The support offered by grandparents extended beyond a child’s early years and into adulthood, according to the study, helping with anything from university fees to first housing deposits. Seven percent of grandparents had lent money to an older grandchild for a housing deposit or big holiday, lending on average £500 per grandchild. One in 20 said they had supported a grandchild with school or university fees.
The study suggests that the rising cost of living has left many families looking to the older generation who typically have less expenses in retirement to help. Seventy percent of grandparents said they gave their grandchildren money because they wanted to help out where they could, and 18% said this was because the child’s parents were unable to do so themselves. Many grandparents are also contributing to the day to day costs of raising a child, helping out with anything from rent or mortgage payments to bills and groceries. In fact, 11% of the surveyed grandparents believed the child would suffer without the money they provided.
When thinking about their motivations, 4% viewed the gifts they make as part of a “living inheritance”. Thirty-seven percent of grandparents surveyed said they wanted to be around to see their grandchildren enjoy the fruits of their earnings, and to make use of what might be later reduced by inheritance tax after their death.
With the changes to pensions and annuities largely coming into effect next April, it is thought that more retirees could take a lump sum under the new rules to help out family. From this survey, 6% of grandparents had already considered withdrawing a significant amount of cash from their retirement savings to support grandchildren financially in some way.
Richard Rowney, LV= Life and Pensions Managing Director, said:
“The generosity of grandparents in Britain is clear to see and it is great that so many feel comfortable enough to be able to help out their family and plan to continue doing so. However, the average retirement is now much longer than past generations and people’s lifestyle and associated costs are likely to change over this period. It is important that those approaching retirement choose to structure their income in a way that offers them enough financial flexibility to enable them to remain generous, but also adapt to their changing needs.
“We would encourage those approaching retirement to seek financial advice to ensure they are able to make the most of their savings and pension funds by selecting the best solution for them.”
Or read more about the changes to pensions and annuities that were announced in March