Generational finances

[Mummyongin]

I don’t expect I can word this right/fairly but essentially, if retired grandparents have some wealth (e.g., 5 figure savings or assets) and their adult children are bringing up young children on barely enough to pay rent/mortgage, energy bills, childcare and food - is this okay? What are your thoughts and beliefs about how to balance wealth and finances more fairly? What role should grandparents play financially?

The people not having children are not the ones whinging for handouts from the elderly.

We are very lucky in that DH family believe that money is there for the benefit of everyone and no use (except sensible savings for a rainy) day and so since MIL inherited from her mum she has - given both us and SIL substantial amounts for house deposits (£40k to us and similar to SIL), paid for a new noiler when ours broke 3 days after moving in, new washing machine after ours broke at xmas and other smaller amounts towards kids residential trips etc. MILs sister also gave us 10k towards the house.

Wouldn't it be more intergenerationally fair if society as a whole paid enough tax to ensure all families had a decent standard of living, rather than if wealthy parents just hand on their cash to their own kids?

There was an article about this in the Times the other day - baby boomer parents are giving large sums to their offspring.

My parents are very wealthy. They bought us a large house when I was in my early 30s and not working as my dc were still small. Now I’m in my 40s, have a good job and no mortgage. It’s made a huge difference to my dc’s childhoods and our lifestyle - we were able to afford holidays, school fees etc. Ultimately the amount I received will be deducted from my share of a larger inheritance- but it was invaluable having the money at a time when it made such a big difference. My parents loved seeing the dgc so happy with their new home.

My step dc recently bought his first home and we gave him a big chunk of the deposit. What goes around comes around. I couldn’t imagine being comfortable whilst my dc struggled.

The point is being financially independent and in the position to make their own choices about elder care without depending on offspring who hold it over them that "I will be choosing your nursing home" as so often seen on Mumsnet.

I don't think retired grandparents have any financial responsibility to their adult children or grandchildren. They should enjoy their own retirement, and where they have loads of money, travel the world, choose their own care home, access better medical treatment, etc. Enjoy the last of their years before their health deteriorates.

If any of their children or grandchildren are disabled, that might be different, but if the adult children are healthy and capable of working, it's down to them to support their own children themselves. However, to be really clear, I also think that the Government has a responsibility to ensure that two adults working full-time with, say, one or two children can actually afford to be independent.

If, say, a working couple is forced to use a food bank, something has gone seriously wrong, and the Government needs to intervene. I don't care whether that means raising salaries, cutting taxes for middle earners, increasing taxes for higher earners or creating top-up benefits for those in work - it's their problem to fix. You can't rely on intergenerational wealth to sort it because the problem is bigger than one family, and not everyone has a wealthy relative to fund them.

A working couple should be able to afford a simple (but not miserable) lifestyle for themselves and their kids without needing family to sub them.

PS It's a shame this Government is a shit show, and the reality is that plenty of working couples are struggling more than is reasonable.

People saying parents should help their DC if they are struggling, or treat the grandchildren etc are missing the point the OP originally made; which is that support should go above and beyond helping out or treats; but come in the form of a substantial ongoing income; even when the parents actually have a relatively small pot to have to live off for the rest of their lives.

Was it this article in the Times, sydneysunset, which said:

"Middle-class homeowners are deepening inequality in Britain by passing down wealth to their children, a leading think tank has claimed.

Parents give away or loan around £17bn to their adult children every year, according to research from the Institute for Fiscal Studies.

Household wealth has boomed in recent decades thanks to a buoyant property market, but passing this down onto the next generation contributes to the nationwide “transmission of inequality”, the IFS said."

I absolutely did not say that

I agree that five figure savings isn't much of a sum to rely your whole retirement on so it's a bit of a red herring for me.

However, as a concept I do think there is something in generational wealth that makes sense with the massive disparities between the current generations. I think a lot of it stems from poor financial education and a lack of a good understanding of compound wealth.

For example, it doesn't make much sense for Granny to have hundreds of thousands sitting in a 3% savings account while her children struggle to pay astronomical mortgages at 5.75%. Even a sensible targeted gift in that situation that took the child over a threshold in LTV could make a massive difference to the younger family in the long-run. A lower mortgage repayment could mean more funds at the end of the month, meaning being able to save for the next generation of children to go to university with smaller student loans and hopefully get better paid jobs....meaning they might be able to get on the housing ladder younger and pay their mortgages off earlier and so it goes on......

I'm not saying the older generation needs to live on bread and water and pass everything on to their children, but so many people take short termist attitudes to this sort of thing, instead of thinking even 2 or 3 generations ahead.

Cynically, I would say the BB generation seem to be the worst for failing to see this. So many expect to retire early 60s but see nothing wrong with Millenials coming behind them looking at retiring 10-15 years later and overall having had a much poorer quality of life. I think it will come to a crunch point in the next few years, as Millenials will not be in a position to help with care due to needing to work longer and more more hours to continue to pay off their large mortgages coupled with a care industry that won't be able to cope with the number of people whose children will be unable to physically supplement their care.

Society as a whole, that is the net taxpayer, already pays quite a bit to sub parents who had children they couldn't afford.

Who gets to decide what constitutes a "decent standard of living" ? Does that include meat or just beans & rice? Takeaways? Starbucks? Charity shop clothing or Primark or John Lewis? Music lessons? A new car? One bedroom per person or shared rooms? Smartphones? Childcare? Holidays? Caravan, camping or overseas by air travel? Legoland?

I think people's expectations are quite inflated these days, in general. They want the lifestyle of middle-aged people who have put 30-40 years into the workforce when they are barely 5 or 10 years out of school. It's unrealisitc.

Five figures isn’t that much for retirement.

YABU.

And if the wealthy parents give away their money, who will pay their care home bill ? The tax payer will.

I'm sure OP is fine with that as long as she is not expected to pay.

I have quite a wealthy parent who gives us no help at all. I'm used to it at this stage but you reap what you sow. Now they're* *getting to be quite elderly, I don't bother to see them much and I would never spend too much of my money doing it. I just do the duty I need to do. It goes both ways.

Sadly I think you are right. Money that could be spent on her having nice experiences with her children is so much more important than her parents having the funds to pay for care with at home or in a care home. I wonder would the council be able to come after her? I'd hope so.

and their adult children are bringing up young children on barely enough to pay rent/mortgage, energy bills, childcare and food - is this okay?

Of course it is.

I imagine that the grandparents had their times of struggle when they had a young family.

And when you’re retired, savings in “five figures” is not a lot.

They need to hang onto that money for a rainy day - to pay carers or nursing home fees!

To be fair when they run out the state takes over nursing home fees

I’m sorry it has come across like this. I have offered for my mum to live with us in the past but she prefers to be independent and I have no problem with that. I have organised and paid for nice parties and gifts for grandparents, and don’t get or expect the same in return. I have recently paid extra childcare costs so I could provide care to one grandparent for health reasons.

It's down to relationships. How close the family are and how they view things.
We are a very long way from being wealthy but have enough. We give our DC money regularly which they never asked for and are very appreciative of.
Neither DH nor my parents had a bean so we didn’t get any " family money". I just feel the DC would benefit from our money more now than when we die.

I’d give my dc my last penny.

I’ve got fuck all though. I would love to help out my 21 year old.

My dad held his money over me my whole life. I had a childhood of nothing while he saved. He wouldn’t even buy me school uniform that fitted.

He watched me struggle but told me it was for after he was dead.

Then he got dementia and everything has gone to a care home owner.

He really, really regretted that when he still knew what was going on. He used to cry and say he wished he’d helped me out.

I won’t be making that mistake.

It is normal to struggle somewhat in life. You don't reap what you've sown till much later, if ever. People seem to have forgotten that and are increasingly entitled.

So who will pay for your care, then?

I don't expect anything from mine. They helped us out with £5k house deposit in the 00s, for which I will be forever grateful as we'd not have our current levels of equity without it.

That said, I'm also not up for nodding along dutifully when they start on about the 3 months they paid 15% interest on a 28k mortgage in the 80s as if it is the same thing as house prices now being 12x household incomes at the same time as £400 energy bills.