The Saltus Wealth Index found seven in 10 (73%) high-net-worth individuals (HNWIs) are financially supporting adult children, while more than two-thirds (68%) are helping their ageing parents or grandparents.
One in eight (12%) are financially supporting both generations, often at the expense of their own financial goals.
The average level of support stands at £7,500 per year, but almost one in five (18%) have gifted more than £10,000 in the past 12 months.
The sandwich generation
The survey marks the emergence of what Saltus is calling the Bank of Son and Daughter, where grown-up children are now supporting elderly parents, reversing the traditional flow of intergenerational support.
This new trend comes on top of the well-documented Bank of Mum and Dad and places HNWIs at the heart of an increasingly complex financial balancing act.
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The report showed that while 42% of HNWIs are managing to fund the support through excess income, a third (31%) have had to sell or use investments and 18% have cut back on lifestyle spending.
One in seven (14%) admit they have had to restructure their finances completely, while one in eight (12%) say they are sacrificing their pensions by either dipping into their pots or reducing their contributions.
The top reasons for supporting adult children include house deposits (23%), car purchases (19%) and day-to-day bills (15%).
When it comes to supporting ageing parents, shopping (45%), utility bills (43%) and rent or mortgage payments (26%) are the most common ways HNWIs are helping. Medical expenses are also a common expense – 19% have paid for a parent to have a one-off medical procedure, while 24% have funded private mental health treatment.
Mike Stimpson, partner at wealth management firm Saltus, said: “The data reveal a remarkable insight into how wealth is flowing through families. The traditional ‘Bank of Mum and Dad’ model is now matched by a rising trend of adult children stepping in to support their parents as the ‘Bank of Son and Daughter’.
“This growing financial squeeze is changing priorities and prompting many to make personal sacrifices. The Government is asking a lot of people who have worked hard to establish themselves. They are often key to funding business growth, providing seed capital and creating jobs – if they are forced to choose between supporting their families and investing in the future, there could be implications for the wider economy through reduced investment, pension saving and wider spending.”
