Over-55s sacrificing standard of living to help loved ones

A number of over-55s are accepting a lower standard of living to help loved ones onto the housing ladder, research from Legal & General and Cebr has found.

Over a quarter (27%) of the Bank of Mum and Dad between 55 and 64 have accepted having a lower standard of living, with over-55 households being typically £18,000 worse off after proving financial support.

This year people increasingly used equity release to help to the homeownership ambitions of relatives, with 14% of all transactions involving the Bank of Mum and Dad partially or wholly being funded by equity release.

Meanwhile 20% of transactions involving the Bank of Mum and Dad were partially or completely supported by downsizing.

Chris Knight, chief executive of Legal & General Retail Retirement, said: “The Bank of Mum and Dad continues to play a major role in the housing market, but the support many people provide is leaving them feeling the pinch as they approach retirement.

“This generation is helping family or friends onto the housing ladder, but they don’t necessarily have the wealth to do so without impacting their own retirement plans, and they should get advice to make sure this won’t leave them short of funds.

“After years of record lows, increases in the base interest rate also provide the added challenge of a rising cost of borrowing.

“Nearly a fifth of those aged 55 and over face a lower standard of living after helping loved ones onto the housing ladder, with one in ten also feeling less safe about their financial future at a critical stage in their lives.

“The good news is that more people are looking at the alternatives. Property wealth has the potential to be a transformative force for so many people in retirement and, as this research shows, more people are now using lifetime mortgages to provide a ‘living inheritance’ that is, transforming the lives of their loved ones.”