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Saturday 23 August 2014

Grandparents suffer as they pay bills for young families

Charlie Weston Personal Finance Editor

Published 05/12/2012 | 05:00

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THOUSANDS of older people are handing over money to their adult children and their grandchildren as the recession grinds down household incomes.

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And in some cases the pensioners are being so generous to their heavily mortgaged children that they have little left for themselves, new research from NUI Galway has revealed.

The study found that it was now far more common for pensioners to be helping their adult children than for the younger people to be financially aiding their aged parents.

High mortgage repayments, declining incomes after tax hikes and pay cuts and unemployment mean that many families with young children are being bailed out by their pensioner parents.

Dr Kieran Walsh, who was involved in the research, said there was now growing evidence of older people providing financial support to adult children and grandchildren – even though poverty and deprivation continue to affect the lives of many pensioners.

The new study, 'Deprivation And Its Measurement In Later Life', found that while older people had not suffered a cut in the state pension, they were struggling to cope following cuts to other state supports, such as the fuel allowance.

"Our study identified a number of older parents who were evidently making major financial sacrifices in order to support the welfare of their adult children," the research paper said.

The study, which was based on interviews with 1,502 older people, was not able to say exactly how many older people were financially supporting their adult offspring.

Older people are experiencing real hardship during the recession, it found. There was strong evidence of large amounts of money being given to adult children by parents.

Mortgages

This was leading to a situation where "the financial stability of older participants (in the study) could be threatened".

The NUI Galway research also refers to what it called "substantial" amounts of money being handed over by parents to adult children.

A women quoted in the study outlines how her daughter is struggling as her husband has been out of work for three years.

"They have children, so we have to try and help them," the older woman – who is based in a rural location – is quoted as saying in the NUI Galway research.

This newspaper revealed recently that almost one in three people over the age of 60 may have acted as guarantor or helped with a deposit for a house for their children during the housing boom.

The fact that so many older people have acted as guarantor leaves them vulnerable if their offspring then default on their mortgages.

The high numbers of parents who have acted as guarantor for a mortgage, or who helped with a deposit for a home, first emerged in research carried out by Bank of Ireland at the height of the boom in 2006.

Irish Independent

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