Mortgages 

Equity release - more meat for the sandwich generation?

This article is part of
Equity Release - June 2014

Demand for equity release products is continuing to grow – this is one thing which advisers involved in the market are very much agreed on.

Something else they tend to agree on is the fact that there’s no such thing as the ‘typical’ equity release customer. There are so many different motivations behind the desire to release capital from the value of a home. But we can easily identify clients whose lifestage and circumstances suggest they’re particularly likely to benefit from this type of product.

The‘sandwich generation’ is faced with a set of pressures and aspirations that combine the demands placed on people within other age groups and lifestages. Often not too far away from retirement themselves – with everything that entails – they also take responsibility for the needs of the generations both above and below their own.

Maybe there’s an aged parent whose long-term care needs to be funded... a son or daughter struggling to get a foothold on the property ladder... or grandchildren whom they understandably want to spoil a little...

Faced with a juggling act such as this, the sandwich generation has more than enough on its plate.

The sandwich generation... who are they?

First coined in 1981 by American academic Dorothy Miller, the term ‘Sandwich Generation’ refers to a generation of people who care for their ageing parents while supporting their own children. Three sub-groups are normally identified:

• Traditional: those sandwiched between aging parents who need care and/or help and their own children.

• Club Sandwich: those in their 50s or 60s sandwiched between ageing parents, adult children and grandchildren, or those in their 30s and 40s, with young children, ageing parents and grandparents.

• Open Faced: anyone else involved in elder care.

Source: www. sandwichgeneration.com

Making the case for equity release

Irrespective of the many challenges they face, ‘sandwich generation’ clients will often be well placed to take advantage of the benefits which equity release can offer. With 66% of over-55sowning their homes outright, many of them will have been in a position to benefit from property market gains. Like other‘baby boomers’, they’re less likely to be averse to borrowing than their own parents were at the same life stage – and more likely to have high expectations of their quality of life in retirement.

At the same time, they may not feel confident that – when the time comes – their children will be able to offer them the same level of support they offer their own ageing parents. This might be due to a lack of geographic proximity or greater financial constraints. The result is a degree of awareness that finance needs to be in place for their later years

People of this generation are also likely to see the wisdom in helping their loved ones to benefit from financial help while they themselves are still around to see it. Using Equity Release to provide a ‘living inheritance’ also means that beneficiaries would receive a lifeline at the stage in life when they are likely to need it most.