People are now supporting their parents, as well as their children
People in the UK are increasingly propping up multiple generations of their families, placing significant pressure on their own financial wellbeing, according to the latest Saltus Wealth Index Report. Saltus surveyed people with assets of £250,000 or more, and found a growing number are providing both downward and upward financial support, often at the expense of their own financial goals.
Almost three quarters of High Net Worth (HNW) parents are providing financial support to adult children, two thirds are supporting their own ageing parents or grandparents and as many as one in eight are doing both.
The findings mark the emergence of what Saltus is calling the 'bank of son and daughter' (BOSAD), 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' (BOMAD).
The Report shows that while 42% of HNWIs are managing to fund the support through excess income, a third have had to sell or use investments and 18% have cut back on lifestyle spending. One in eight 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%), while shopping (45%), utility bills (43%) and rent or mortgage payments (26%) are the most common ways HNWIs are helping their own parents. Medical expenses are also common.
Almost one in five of those supporting family have gifted more than £10,000 in the past year (more than half of those, and 7% overall, have given more than £15,000) while the average sum gifted is £7,500.
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.'
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