Financial tug of war between the generations
New research from SunLife has found that while 17% of 55-65s are expecting to be supported financially by their grown up kids when they retire, 19% of adult children are relying on inheritance from their parents.
This is up from 17% last year, as more adult children become dependent on financial support from their parents.
The latest Cash Happy report from SunLife also found that one in ten adult children are so reliant on an inheritance they believe their parents are spending too much money!
SunLife’s research revealed this financial ‘tug of war’ is affecting many people’s lives.
A fifth of 18-34s are providing financial support to their parents, while one in seven 55-65 year olds are providing financial support to grown up children no longer in education.
However, while a huge 80% of the 18-34s who are finically supporting their older parents are finding it a struggle, with half of those saying it is a constant struggle, less than two thirds of the 55-65s who support adult children find it a struggle, and only one in seven of those find it a constant struggle.
This may be explained by the fact that, as a percentage of income, older people are generally better off than younger generations; those age 55-65 have 37% of their income allocated to fixed costs, compared to 39% for 18-34 year olds.
According to Ian Atkinson, head of brand at SunLife:
“We’re seeing an older generation with high home ownership spending their savings, investments and income on enjoying the best years of their life, knowing they can still leave their home as a legacy.
“It’s not really fair to call them ‘SKIers’ (Spending Kid’s Inheritance) – it’s their money in the first place, and perhaps it’s only right that, when they’re reaching an age of more free time and fewer responsibilities, they’re using that money to fulfil some lifelong ambitions.”
Earlier this year, 83-year-old Joan Bakewell, who has a fortune of around £5million, announced she would be leaving her kids nothing, saying ‘I don’t mind admitting that as I’ve grown older I’ve grown fond of posh restaurants, nice clothes, good handbags. I feel I’ve earned the right to indulge myself.’”
And with life expectancy now at 79 for men and 83 for women, those in their 40s and 50s who are ‘expecting’ an inheritance could be waiting a long time.
Analysis by The Telegraph revealed that in 1999, the average Briton who inherited money was aged just under 53.
Today, as a result of rising life expectancy, it is rapidly approaching 60.
Rather than assuming our financial futures will be secured by an inheritance, parents and children should plan together.
By financial planning like this, it is possible to avoid a financial tug of war between the generations and work together towards common goals for family wealth.[tweet_box]Avoid the financial tug of war between the generations with careful family wealth planning[/tweet_box]