Legal & General Group: 1+ Million U.S. Moms and Dads Compromise Their Golden Years To Help Kids Buy Their First Home

  • 54% of U.S. parents and grandparents drained cash savings to help
    younger family members purchase property
  • 7% postponed retirement, 15% reported lower standard of living, 14%
    felt less financially secure
  • 48% made gifts or loans without getting professional advice

NEW YORK–(BUSINESS WIRE)–In 2018, over a million parents and grandparents in the U.S. ponied up
$41 billion to help the younger generation buy a first home—54 percent
of which came out of their cash savings for retirement. Almost one in
six of these ‘Bank of Mom and Dad’ (BoMaD) lenders are accepting a lower
standard of living, according to research sponsored by Legal
& General Group
. The
recently released study
found that more than a quarter (29 percent)
of U.S. parents and grandparents surveyed have provided financial
assistance to children and grandchildren purchasing property. However,
more than one in every six (15 percent) believe they are financially
worse off as a result; and 14 percent also said they feel their
financial future is less secure. To round out this worrisome picture, 7
percent of BoMaD lenders had postponed retirement after helping family
or friends get onto the housing ladder, 39 percent of these by 3+ years.

Legal & General Group Chief Executive Nigel Wilson commented, “The Bank
of Mom and Dad is playing a major role in the U.S. housing market, but
the generosity and support many people choose to provide family members
is compromising their own quality of life. This generation is helping
kids and grandkids purchase property throughout the country, but it
would appear that many don’t really have sufficient wealth to do so
without impacting their own retirement plans. It’s disturbing to see
that some Moms and Dads have even had to postpone retirement in order to

The number of ‘lenders’ accepting a lower standard of living was higher
among those in the Mid Atlantic states, with over a quarter of
respondents from this region also feeling less financially secure.
Despite this, BoMaD lenders still help younger family members navigate
the property market, using savings or, as 15 percent of respondents
reported, taking out loans to do so.

Other sources of funding that BoMaD lenders have used, or would consider
using to assist family members, include raiding either their IRAs or
their 401(k)s (8 percent each). Seven percent refinanced their homes,
and 6 percent downsized to a smaller property themselves. Having reached
a deserved stage of rest after a long life of work, and in many cases
having already substantially helped their kids through college, 5
percent even came out of retirement to help their kids toward a
lifestyle they may have come to expect growing up in the relatively
greater affluence of previous decades.

The BoMaD study also found that lenders—operating on an emotional
basis—were unlikely to take professional advice when helping their kids
and grandkids financially. Before gifting or loaning the money, nearly
half of respondents (48 percent) didn’t or wouldn’t seek any
professional advice about their choices. “Whatever the source of funds,
only a quarter of BoMaD lenders sought advice before they helped their
kids financially. That number is surprisingly low—as an industry, we
should encourage more people to seek advice to make sure helping younger
family members won’t leave them short of money in later life or
concerned about their own financial future,” L&G’s Nigel Wilson noted.

Other key findings from Legal & General’s “Bank of Mom and Dad”
research include:

  • 37 percent of BoMaD lenders give the money outright, meaning they
    don’t expect to recoup any of it; an additional 33 percent provide a
    loan with no interest
  • 23 percent of parents and grandparents helped first-time buyers, while
    4 percent helped those upsizing
  • Those unable or unwilling to help family members financially cited 3
    main reasons:

    • Low income (25 percent of respondents)
    • The belief that family members should be self-reliant (20 percent)
    • Lack of savings (13 percent)
  • 51 percent of lenders think it’s harder for younger generations to buy
    than it was for them, citing out-of-sight property prices (71 percent)
    and incomes not increasing (63 percent)

For more information on the 2019 BoMaD U.S. study, or to see a copy
of the report, please contact:

Meir Kahtan:

Maria De Angelis:

Meir Kahtan Public Relations, LLC +1 212-575-8188


The information contained in this press release is intended solely for
use by journalists, and should not be relied upon by private investors
or any other persons to make financial decisions.

About the Study

Legal & General commissioned Cebr, a UK-based economics consultancy, to
conduct proprietary research into the lending/giving patterns of family
and friends in U.S. home purchases and college education. The BoMaD USA
research was compiled using original survey data of 2,177 total
respondents throughout the U.S., as well as existing data sources
relating to transaction levels. The survey work was carried out by
YouGov and Censuswide. For the borrowers the total sample size was 1,159
adults. Fieldwork was undertaken from September 26 – October 4, 2018.
For the lenders, the total sample size was 1,018 adults. Fieldwork was
undertaken from September 26 – October 2, 2018. Both surveys were
carried out online. In order to arrive at the overall value of BoMaD (in
terms of the value of lending) we used data from the survey to obtain
the share of transactions supported by BoMaD and the average value of
the assistance. This was then scaled up using Cebr forecasts for
total property transactions.

About Legal & General Group

Established in 1836, Legal & General is one of the UK’s leading
financial services groups and a major global investor, with
international businesses in the US, Europe, Middle East and Asia. With
over £1 trillion in total assets under management, we are the UK’s
largest investment manager for corporate pension schemes and a market
leader in pensions de-risking, life insurance and workplace pensions. We
have also invested over £19 billion in direct investments such as homes,
urban regeneration, clean energy and small business finance. In the U.S.
alone, we provide life insurance to over one million people.


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