Article date: 15 August 2008
- Even people in their fifties expect bail-outs from mum and dad!
Research released today by Norwich Union reveals that parents face a lifetime of giving their offspring financial support - even when children are in their 40s and 50s.
Norwich Union, the UK's leading provider of equity release, surveyed a sample of 1,974 adults to find out to what age they believe their parents' financial responsibility towards them should end.
Some 42% of 45-54-year-olds and nearly half (48%) of people aged 35-44 expect or receive financial help from their parents. While almost three quarters (73%) of those aged 18-24 and 65% of 25-34 year-olds would do so.
Almost half (49%) of adults surveyed said they still expect their parents to help them financially if they had serious problems with debt, lost their job or were about to be repossessed (see table).
The top 10 reasons people approached their parents for help were:
- If I had serious difficulties with debt (26%)
- University costs / living expenses (20%)
- If I lost my job (19%)
- University fees (17%)
- Schooling (16%)
- If my home was to be repossessed (16%)
- Buying first car (14%)
- Buying first home (11%)
- Following a divorce (8%)
- Help with general cost of children (7%)
While serious difficulty with debt was the top reason for a quarter (26%) of adults to seek financial help from their parents, this rose to 43% among 18-24 year olds and compares to one in five (21%) of those aged between 45 and 54, a high percentage for those who by this age may well be parents or even grand parents.
Dominic Fraser-Smith, equity release group product manager of Norwich Union, said: "The most surprising aspect of this research is the proportion of people aged between 35 and 54 who expect their parents to provide financial support when things get tough. You might expect people in this age bracket to be financially self-sufficient. The problem is that the parents of these people will either be in or approaching retirement and may well be facing the fact that their own incomes are much reduced.
"My view is that more people are now being affected by the credit crunch and rise in the cost of living and view their parents as banker of last resort - especially as they see them as benefiting from many years of significant house price increases.
"We estimate that the value of housing owned by retired people is about £840bn. Our research shows that around one in five people who take out equity release do so to help their children, either to provide an early inheritance or to help them out financially."
Psychologist Donna Dawson said: "The present economic doom-and-gloom seems to be making people want to regress to a time when they felt emotionally safer, more protected and without financial responsibility - that is, a time when they were living with their parents and ‘mummy and daddy could fix it'.
"It may be that when it comes to money problems we never really grow up, but are still hoping that someone - in this case, our parents - will bail us out. However, with more people living longer and needing to hold on to their funds in order to survive, this could be wishful thinking on the part of their children and grandchildren.
"It appears that the older generation have forgotten to pass on their own values of frugality, self-discipline and independence to their children, or perhaps their own past hard times have made them more generous. Whatever the real reason, it is interesting to note that almost half of those in their fifties expect their parents to help them financially, almost as if it were their right."
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Notes to editors:
Research conducted online by YouGov Plc among a GB representative sample of 1974 adults in July 2008.
Table 1 - What problems would you expect financial help from your parents?
I don't/didn't expect any assistance at all
Expect parental assistance
If I had serious difficulties with debt
University living expenses
If I lost my job
If my home was repossessed
Buying first car
Buying first home
Following a divorce
Cost of children
Renovation of first home
Buying subsequent homes
About equity release
Norwich Union is the leading provider of equity release plans in the UK. Source SHIP
Equity release is a way of unlocking some of the capital in your home and turning it into cash - without having to move. Norwich Union offers two types of equity release plan. These are known generically as:
- Lifetime mortgage: A loan secured against your home, with no regular repayments to make as the loan and interest are rolled up and usually repaid when you die or if you need to move into long-term care.
Lifetime mortgage including a drawdown option: A lifetime mortgage that enables customers to unlock some of the value in their home by releasing an initial amount of money and keeping a reserve fund available that can be released in future when required.
The interest charged is calculated on the total of the amount borrowed and the interest already added, which quickly increases the amount you owe
- Home reversion plan: Enables you to sell all or a percentage of your home in return for a cash lump sum. Because the money is provided upfront and you continue to benefit from living in your home you will get less than the full market valulation of the property.
Taking a lump sum plus costs will reduce the value you have in your home and therefore any inheritance you leave. Your tax and welfare benefits may also be affected.
This is a lifetime mortgage or home reversion plan. To understand the features and risks, ask for a personalised illustration."
Norwich Union is a found member of SHIP (Safe Home Income Plans), a group that was launched in 1991 and is dedicated entirely to the protection of planholders and promotion of safe home income and equity release plans. All participating companies are pledged to observe the SHIP Code of Practice.
About Norwich Union
Norwich Union is the UK's largest insurer. It is a leading provider of life, pensions and investment products and one of the largest financial adviser (FA) providers. FAs provide over 70% of the company's long-term savings business in the UK.
Norwich Union is the UK's largest general insurer with a market share of around 14%, with a focus on insurance for individuals and small businesses.
Norwich Union's news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media
About Donna Dawson
Donna Dawson is a psychologist specialising in Personality and Behaviour (BA Hons, MSc, completing PhD), who has gained her credentials at the prestigious Brandeis University (Massachusetts, USA), Manchester University (England), and the University of London. She covers a wide variety of subject mater to explain how a person's behaviour and choices reflect back on their personality, including money habits, food choices, colour preference, and other lifestyle choices. Donna advises large consumer-oriented companies on the creation of lifestyle surveys as well as analysing the results, producing reports, quotes, personality ‘types', quizzes and convention speeches where required.