In the UK, there’s more than 6.6 million multigenerational households, because of the high renting costs or to save towards a deposit. Our recent Changing Households Report1 revealed that almost one in 10 millennials who’ve moved out have moved back home with their parents to save up towards a deposit for their first home. As this living arrangement becomes more common, parents may need to think about how they can implement helping their children buy a home into their financial retirement plan.
A multigenerational household is more than two generations living under the same roof, such as grand-parents, parents and adult children.
We recently spoke to Jack Mcgill from Essex, who helped his son and daughter-in-law get on the property ladder. He commented on the current housing climate, stating: “I think house prices are ridiculously high, getting on the housing ladder is almost impossible for those living in and around London – it’s almost impossible without the help of parents.” Our recent Real Retirement Report2 revealed that 31% of parents over 45 have supported their children, by helping them buy their first home and get on the property ladder. Mcgill felt that “most people will find it impossible to get on the housing ladder unless the prices fall steeply or they get help from family.”
In the end, Mcgill decided to turn to multigenerational living to help his son. “I was until last month living with my son and daughter-in-law who occupied the upper floor of my home,” Mcgill explained. He told us how he arranged space for his son and partner to live with him, “I had a bedroom upstairs converted to a kitchen so they could be as separate as possible.”
Mcgill explained how this was all part of his retirement plan. “The idea was that I would convert the upstairs to provide me with an income stream in my retirement, so the arrangement was permanent. I have since let the upstairs to a student.” Not only did Mcgill’s multigenerational household help his son, but it also helped him financially in the long run - and through retirement.
It’s now common for people aged over 45 years to prepare their current homes for retirement. Our report also unveiled that more than three quarters (77%) of home-owners over 45 have made home improvements in the last five years, 80% of those are aged 55-64. This is because people over 45 don’t want to leave their current home, and they want to live there as long as possible - just like Mcgill. “I’m happy where I am. I get an income from letting out part of my home.”
Having the whole family under one roof has its perks, such as always having company, sharing living costs and sharing chores – but is a multigenerational household a retirement solution that’s suitable for everyone? For Mcgill, it worked, and he reflects on how his retirement plan is not only securing his golden years, but his child’s future. “I feel that owning your own home is a good thing as it helps with: finances, family and personal security. As long as you’re not so overstretched, that you lose all you’ve invested in it during hard times that may occur in the future.” Mcgill leaves us on his final note on how happy he is that he can help his son and his future family:
I’m lucky enough that I could help my son if the worst came about, he will in any case inherit my home, and hopefully a little money I don't manage to spend before I go. This would make his life - and that of my brand new granddaughter - happier and more financially secure.
As families look for ways to save money, multigenerational households are becoming a common solution - but can they learn to live together?
This case study looks at the different ways retiring parents can help finance their child, towards getting on the property ladder in retirement
Aviva’s Family Finance Report 2016. Over 2,000 people aged 18-55 who live as part of one six family groups were interviewed to produce the report’s latest tracker findings for Q2 2016, with additional interviews among 18-35s taking the total in this age group to 1,073 for the spotlight on millennials. A further poll of 2,000 UK adults, including 527 aged 18-34, was carried out one week after the UK’s referendum decision on its EU membership to see how confidence in people’s financial futures was affected by the vote to leave.
Aviva’s Changing Households Report 2016. Based on a nationally representative survey of 2,000 UK adults aged 16 and over, carried out by Censuswide in April 2016.
Aviva’s Real Retirement Report 2016. Designed and produced by Aviva in consultation with ICM Research and Instinctif Partners. The Real Retirement tracking series referenced within this report has been running since 2010 and totals 24,791 interviews among the population over the age of 55 years, including 1,193 in May 2016 for the latest wave of tracking data (Q2 2016). This edition’s spotlight on over-45 homeowners examines data from 1,127 owner-occupiers or mortgaged owners in this age bracket, who were interviewed at the same time. For the tracker, a further poll of 737 over-55s was carried out one week after the UK’s referendum decision on its EU membership to see how confidence in people’s financial futures was affected by the vote to leave.
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