"If the country is expected to start recovering economically from the pandemic’s effects, the strain on people’s finances is still expected to be felt for the months to come."
Over 50s have lent a total of £8.2 billion to relatives since the start of the pandemic, according to new research from OneFamily.
25% of over 50s have provided financial support to their family members since the start of the coronavirus pandemic, with £1,298 being lent on average per person during that time.
44% said they put a strain on finances in order to lend money to family, with 21% admitting to having felt pressure to step in and help members financially. As a result, OneFamily says there is likely to be an increased need for financial advice and potentially measures such as equity release to free up funds as the pandemic wears on.
Seeing younger generations suffer a decrease in income (34%) was the key reason given for this intergenerational lending, with family members getting furloughed (18%) or losing their jobs (14%) also key factors.
People over 50 have been withdrawing money from savings accounts (53%) and their current accounts (37%) in a bid to financially prop up their families. Credit cards also didn’t remain untouched, with older generations resorting (5%) to raiding them to help their loved ones, and some (2%) over 50s even had to sell their belongings to be able to access some extra cash.
Iain Clark, OneFamily’s director of lending, said: “When we think about the pandemic’s financial effects, we think of the Millennials, who have been some of the most severely impacted. However, as our research shows, the over 50s have felt a great pressure to support their families too.
“Now, more than ever, Generation X and Baby Boomers need to have expert guidance and support from advisers. The past year has had a great impact on everyone’s lives, and even if the country is expected to start recovering economically from the pandemic’s effects, the strain on people’s finances is still expected to be felt for the months to come.
“Our research suggests that people are taking out credit, dipping into their ISAs and even selling belongings to support their families through these tough times. Financial advice is going to be absolutely crucial for people so that they can find the right product for their needs.
“Options such as releasing the wealth that’s tied up in their property might be one solution – allowing a living inheritance at the time when family members are most in need, without impacting on day-to-day finances. In some instances, it’s also possible to make a payment towards the interest each month, preventing a roll-up of the borrowing to reduce the impact on the inheritance that younger generations will receive.”