MORE THAN 20 MILLION PARENTS GIFTING TO OFFSPRING DUE TO COST-OF-LIVING CRISIS

Around two-fifths of parents across the UK (39%), the equivalent of 20.7 million people, are supporting their adult children and grandchildren financially, according to new research* from Handelsbanken Wealth & Asset Management. One in six (16%) are planning to give more than previously to support them through the cost-of-living crisis, with just 9% cutting back on their financial support.

Christine Ross, Head of Private Office (North) and Client Director at Handelsbanken Wealth & Asset Management said: “As the cost-of-living crisis persists, it is often falling to older generations to support their family through the financial hardship.

“It is important for those either heading towards retirement or already retired to ensure their finances are in order – both for themselves, but also for their family members when they need it the most. To work out what you could afford to gift, calculate your likely annual expenditure in retirement and allow for an ample buffer beyond that before committing to any significant sums.”

As the cost-of-living crisis continues to impact so many, Britons are polarised on the importance of funding certain costly activities. With countless families likely to have seen their budget for non-essentials such as holidays eroded, they are now relying on older generations to preserve their quality of life.  Half (48%) of those supporting their family are subsidising the cost of a holiday for their children or grandchildren, with one in 10 planning to increase their support.

Aside from holidays, the most common reasons for parents providing financial support are to help with a child’s education (44%) and to help pay utility bills (43%).

Ross, added: “As the research shows, many have different views on what is considered to be an important expense, with many parents focusing their support on helping their children maintain a good quality of life post-pandemic, despite the cost of living squeeze many are experiencing.

“When giving your family members a financial gift, there are a couple of things that can be done to help ensure the money is spent as intentioned. There has to be a level of trust and acceptance over what happens to the money once it leaves your account. As a starting point, you could ask the recipients to sign a letter of intent, stating what they will use the money for. While this letter is in no way legally binding, it can pull on the conscience of a relative and encourage them to spend as agreed.

“Additionally, if the money is given towards a house that will be shared with a partner, a cohabitation agreement or Living Together Agreement (LTA) can be drawn up. This is a legal document common among unmarried couples that establishes how any assets will be divided upon the breakdown of the relationship.”

Regionally, the highest proportion of parents providing financial support can be found in the East of England, where nearly half (49% and 48% respectively) do. Parents in the North West and London are most likely to be increasing their current financial support in light of the cost-of-living crisis, with one in five committing to. The region where the highest proportion of parents is reducing financial support is Northern Ireland* (26%).