The power of the ‘grey pound’: 3 ways retirees are helping out the next generation

People’s incomes typically drop when they hit retirement, but many of today’s pensioners are in a stronger financial position than their younger relatives. This means that a rising number of retirees are providing their younger family members with monetary support.

Many of these people have built their wealth through decades of investment. For example, they may have put money in flexible premium saving products like Quantum from RL360°. This policy provides people with an adaptable way to accrue money for the future. Before committing to particular investments, they might have sought guidance from qualified financial advisers. They may also have done some detailed research online. For example, they might have looked at RL360° reviews or breakdowns of other financial products online.

However they built up their wealth, here are three ways retirees are helping out the next generation.

1. Putting money down for property deposits

Getting onto the property ladder is becoming more of a challenge, with house price rises continuing to outstrip increases in earnings. Data from the English Housing Survey reveals that the number of first-time buyers has fallen by a third over the last two decades, while the average age of a first-time property purchaser has gone up from 30 to 33 over this period. Many people now find it difficult to pull together enough money for a deposit, and this is where the bank of mum and dad, or grandma and grandpa, can prove useful. A considerable number of first-time home buyers now rely on this financial assistance to take their first step onto the housing ladder.

2. Paying for education

Gone are the days of free higher education. People now have to pay sometimes significant sums in fees to continue their learning, and there are other costs for students to bear too. From accommodation to food, study equipment and entertainment, the expenses associated with life at university can quickly mount up. According to research by NotGoingToUni, parents are giving their kids an average of £2,285 a year to help them cover their costs. Without financial support from their families, many students may find it impossible to complete their courses.

3. Helping out with the costs of a first car
Learning to drive and having access to a car is essential for many people. It can give them greater independence and enable them to travel to college or work. However, becoming a motorist isn’t cheap. Getting lessons is the first financial hurdle people face, and these sessions now cost an average of £25 per hour. This can mean that tuition alone can set people back a total of £1,000 or more, and then there’s the test to pay for and the bigger expense of actually buying a vehicle. It’s no surprise then that many retirees find themselves shelling out for driving lessons and cars for their children or grandchildren.

Of course, without some sound financial planning along the way, pensioners wouldn’t be a position to provide support like this.