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OneFamily Adviser

Covid-19 could see greater use of housing wealth by Sandwich Generation

Posted in: Corporate

The Covid-19 crisis could see an increase in equity release by the Sandwich Generation to facilitate intergenerational financial support.

  • Twenty percent of those considering equity release say that the pandemic’s impact on their broader family’s finances has meant that they’re more likely to take out the product1
  • Stuck between caring for elderly parents and looking after adult children, who are yet to fly the nest, the Sandwich Generation was already having a tough time.  Unfortunately, the Covid-19 pandemic is only making things harder.
  • This is according to research from OneFamily, which also found that over-55s are already giving financial handouts to younger family members.  Sixty-nine percent of over 55s say they have helped their adult family financially in the past in some way, most commonly just to make ends meet (30%), while 23% took out money to help family pay off debts.2

The Sandwich Generation is a sector that’s growing in number, an Office for National Statistics report in 20193 suggested that as many as 3% of the UK’s general population – 1.3 million people – are emotionally and financially supporting both their parents and their stay at home children.   Worryingly, it also stated that 27% are showing symptoms of mental ill-health as a result of trying to juggle both sets of responsibilities.

Increasing life expectancy has meant the older generation is living longer, but the associated health needs of an aging population will mean that they have greater care requirements. However, the OneFamily research also showed that 46% of over 55s worry that they don’t think their family will be able to support them financially when they get older.4

Meanwhile younger family members are struggling to get onto the housing ladder due to student debt, property prices, lack of job security and the cost of living. Only 50% of the oldest millennials, who are nearly 40 years old, are homeowners.5

All this contributes to the fact that 15% of over-55s who used equity release did so in part to help family members6 under even more pressure now due to Covid-19.

However, there is still room for growth in this area, supported by careful financial advice. Currently, while the economic situation means 42% would rather pass money onto their family whilst they’re alive to help them out, only 14% think that equity release is an option for this. Meanwhile, one in five (20%) never talk with their family about money at all, despite 34% being worried about their family’s financial issues7.

Paul Bridgwater, OneFamily’s Head of Lending Proposition said:

This is not a problem that’s going to go away on its own. The Sandwich Generation are caught in the middle, caring for a generation either side of them whilst some of them are also trying to juggle their own work alongside their busy lives.

Equity Release has come under some focus recently, but here is an example of how a not insubstantial group of people could benefit from being given good advice that would help to relieve the pressure on their lives.

With the right product they could free up wealth in their own property to find that deposit for their children’s first home and help them with some much-needed financial support.  Equally, equity release could be a solution to enable greater care support to their parents and give the Sandwich Generation a much-needed break.

Equity release isn’t right for everyone, but clearly there are some important social needs that could be met with careful, focused wealth planning.

To find out more about One Family Lifetime Mortgage products visit onefamilyadviser.com/lifetime-mortgages.

All figures from Opinium April 2020 survey among 2,000 over-55s unless otherwise stated.

  1. Opinium April 2020 survey asked over 55s If the news around coronavirus and the potential impact on finances and lifestyle make them more or less likely to use equity release? – 20% have answered “More likely” on average
  2. Opinium April 2020 survey asked over 55s “Which, if any, of the following have they helped family members out with financially in the past?” – 30% chose “Making ends meet financially”, 23% chose “Paying off debt”
  3. More than one in four sandwich carers report symptoms of mental ill-health
  4. Opinium Apr 2020 survey asked over 55s whether they agree with the statements “I don’t believe my family could support me financially when I get older if I become dependent on them”
  5. Projections derived from Resolution Foundation analysis on proportions of ‘family units’ living in each tenure. Forecasts using this data were based on pooling the home ownership trajectories of three previous generations (51/61/71) to create an average growth rate reflecting different economic environments. This produces an ‘agnostic’ projection about the home ownership and rental trajectories of those born in 81 (leading-edge millennials) over the coming decades
  6. Opinium April 2020 survey asked over 55s who had used equity release, what they used the money for. 16% selected “Give money to a child/children/other family member” as either a main (3%) or partial reason (12%)
  7. Opinium Apr 2020 survey asked over 55s whether they agree with the statements “I worry about my family’s finances”, “I never talk about money with family members”