Half of parents give kids an early inheritance
Over-55s retirement specialist Key Retirement found that more than half (53%) of parents plan to make major financial gifts to their children, with an average target of £15,000 per child, while more one in 10 (11%) expect to give more than £25,000 in gifts to each child.
Over half will fund the payouts through their savings but increasingly over-55s are looking to release cash from their home to help out family.
More than a fifth (22%) of those not wishing to, or able to use savings would use equity release to fund their gifts.
Equity release boom
The equity release market is seeing record growth, according to the Equity Release Council, which recorded a rise in sales of 61% during the first three months of 2017 for the same period of 2016, as over-55s cashed in an average of £6.9m a day.
Over a third (34%) of generous family members are helping their loved ones get a foot on the property ladder by using the money to help their children and/or grandchildren with a deposit for a new home, while a staggering 58% specifically want to help their children or grandchildren get on or move up the property ladder. Other support includes helping their family buy a car (17%) and paying for a wedding (13%).
Education is also a popular reason for parents to gift money to their family. One in 10 (10%) will gift money for higher education and/or training. The same amount (10%) plan to help pay off student debts.
Dean Mirfin, technical director at Key Retirement, said: “It is clear parents and grandparents want to help and are already doing a lot to make gifts with more than half planning major handouts.
“The research shows high awareness of the use of equity release to fund gifts. More than two thirds were aware that they can release equity from their homes to help their loved ones.
“For those who maybe do not have the savings to make gifts, access to money which can be raised through equity release, is seen by many as the best early inheritance that people can give. It can have a dramatic effect on their families’ longer term financial wellbeing and the desire to gift remains relatively consistent across most of the UK.”