OneFamily has reported that 20% of those considering equity release say that Covid-19’s impact on their broader family’s finances has meant that they’re more likely to take it out.
The lifetime mortgage provider said that, stuck between caring for elderly parents and looking after adult children, who are yet to fly the nest, the so-called ‘sandwich generation’ was already having a tough time and the Covid-19 pandemic is only making things harder.
This is according to research from OneFamily, which also found that over-55s are already giving financial handouts to younger family members. 69% of over 55s say they have helped their adult family financially in the past in some way, most commonly just to make ends meet (30%), while 23% took out money to help family pay off debts.
An Office for National Statistics report in 20193 suggested that as many as 3% of the UK’s general population – 1.3 million people – are emotionally and financially supporting both their parents and their stay at home children. It also stated that 27% are showing symptoms of mental ill-health as a result of trying to juggle both sets of responsibilities.
The OneFamily research also showed that 46% of over 55s worry that they don’t think their family will be able to support them financially when they get older.
Meanwhile younger family members are struggling to get onto the housing ladder due to student debt, property prices, lack of job security and the cost of living. Only 50% of the oldest millennials, who are nearly 40 years old, are homeowners.
All this contributes to the fact that 15% of over-55s who used equity release did so in part to help family members under even more pressure now due to Covid-19.
However, while the economic situation means 42% would rather pass money onto their family whilst they’re alive to help them out, only 14% think that equity release is an option for this. Meanwhile, 20% never talk with their family about money at all, despite 34% being worried about their family’s financial issues.
Paul Bridgwater, OneFamily’s head of lending proposition, said: “This is not a problem that’s going to go away on its own. The sandwich generation are caught in the middle, caring for a generation either side of them whilst some of them are also trying to juggle their own work alongside their busy lives.
“Equity release has come under some focus recently, but here is an example of how a not insubstantial group of people could benefit from being given good advice that would help to relieve the pressure on their lives.
“With the right product they could free up wealth in their own property to find that deposit for their children’s first home and help them with some much-needed financial support. Equally, equity release could be a solution to enable greater care support to their parents and give the sandwich generation a much-needed break.
“Equity release isn’t right for everyone, but clearly there are some important social needs that could be met with careful, focused wealth planning.”