Bank of Mum and Dad
‘Bank of Mum and Dad’ means many adults will be left with no financial provision for care
We were really interested to see this article produced by Wesleyan Assurance Society , not sure what we can do about this growing problem, but at least we should be aware !
- More than half of over 40s expect to financially support children beyond the age of 21
- 80% have not made plans to cover the cost of care in old age
- Almost two-thirds could not estimate the correct cost of care
New research by Wesleyan Assurance Society reveals the ‘Bank of Mum & Dad’ is leaving many parents with a potential financial black hole when it comes to care provision, as they continue to prioritise their children’s financial needs in adulthood over their own.
The study of over 2,000 adults UK-wide revealed that of those aged over 40 with children, over half (62%) expect to assist them financially in adult life (i.e. beyond 21 years old) with a deposit for a house, helping to pay rent, or saving towards future education, for example. In contrast, less than a fifth of these adults (17%) have started to make plans for the cost of care in their own old age.
An additional study of Wesleyan’s professional customers – doctors, dentists, lawyers and teachers – shows a similar picture. 80% of customers over 40 surveyed said they expected to financially support their children into adulthood. However they are better prepared for their old age than UK adults generally, with 33% indicating they have made financial plans for their own care provision.
‘Sandwich generation’ set to be worse off than their parents
The research also suggested that the ‘sandwich’ generation (those with elderly parents and financially dependent children) will be worse off in older age compared to their parents.
Just 8% of the over 40s nationally contribute or expect to contribute to the costs of care for their parents. The most common reason given for not supporting parents was that they are ‘financially secure’ and have already made provision for their own care (45%).
This picture was slightly different for Wesleyan customers with 27% contributing or expecting to contribute to their parents care and 64% saying their parents were financially secure.
Underestimating the cost of care
As well as facing the financial squeeze caused by supporting the younger generation, those surveyed were also unaware of the true cost of care in their own old age, making any potential financial planning even more difficult.
The research also showed that almost two-thirds of those questioned underestimated the cost of care (59%) with little variance among Wesleyan’s customers (62%). On average, respondents underestimated the cost of care by £6,000 with figures showing the true cost of care to be in the region of £27,000, and climbing to more than £37,000 with nursing costs.*
Bridgit Richards, Wesleyan’s Head of Marketing said: “Our research shows that there is a generation who are supporting their children for much longer than they probably expected. These same people could be living longer and yet are less prepared for old age than their parents. While our professional customers may seem to be in a better position, there are still huge numbers who haven’t yet started to plan for care in later life".
"The government is consulting on a proposed cap on social care costs of £35,000. Whatever the outcome of this, we would suggest that parents over 40 need to consider their own needs as well as those of their children.”
NOTES : Wesleyan provides specialist financial advice and products to doctors, dentists, teachers and lawyers.
Wesleyan carried out a survey of 2,201 members of the general public between 5th and 7th November 2012. 1,300 were over the age of 40.
Wesleyan’s own research was carried out on 93 customers in October/November 2012.
*Figures according to PayingForCare http://www.payingforcare.org/care-home-fees
About Wesleyan Assurance Society:
- Wesleyan offers specialist financial advice to hospital doctors, GPs, dentists, lawyers and teachers through its principal distribution brands Wesleyan Medical Sickness, Wesleyan for Lawyers and Wesleyan for Teachers.
- Wesleyan Assurance Society is a mutual and was founded in 1841. It celebrated its 170th anniversary last year.
- Wesleyan is the only life office to be ranked ’10 out of 10’ for seven successive years in Cazalet Consulting’s independent survey of with profits offices.
- Chief Executive Craig Errington was named 2011 Institute of Directors (IoD) Director of the Year after earlier winning the national award for Director of the Year for Large Businesses.
- The Wesleyan Group has in excess of £4.6 billion of funds under management as at 31 December 2011.
- Wesleyan Assurance Society Head Office: PO Box 3420, Colmore Circus Birmingham B4 6AR. Website: www.wesleyan.co.uk