Tom Emery (Netherlands Interdisciplinary Demographic Institute)
The General Election campaign is now well under way and one underlying theme is the intergenerational nature of modern Britain. This covers lots of different policy areas like the social care a daughter provides for her elderly mother; childcare and the grandparent who looks after a grandchild while their Mum is at work; or tuition fees and housing with parents helping their children meet the increasing costs of starting out. Yet with people living longer and shifts in the timing of many key life events, it’s crucial that we seek to understand the interconnected nature of intergenerational relations. In this article, I examine some of the key dynamics in intergenerational relationships before outlining potential policy solutions to how generations might better support each other throughout life.
The Bank of Mum and Dad
The intergenerational issue that draws the most attention in policy debates is what is broadly referred to as the Bank of Mum and Dad. This is when parents provide financial help to their kids, typically with regard to specific events such as attending university or getting a foot on the property ladder. Unsurprisingly, research has consistently shown that those who receive financial help are more likely to attend university or buy that first home, suggesting that those who have families who help them financially are at an early advantage.(1) It might not be surprising to hear that those who are most likely to receive this kind of help are those with the wealthiest parents and this has obvious consequences. If those from wealthier backgrounds are more likely to have such opportunities, this could have consequences for social mobility and raises policy questions about how we might identify and help those without such family resources to draw from.
But whilst their parents’ wealth does help explain why some young adults receive help and others don’t, a far more crucial factor appears to be the impact of specific events such as retirement or inheritance from grandparents. When young adults reach that crucial time in their life when they are finishing education, buying a house and thinking about starting a family, their parents are generally starting to think about retirement. Once parents have retired, they then tend to have little spare cash for their children. Their grandparents on the other hand are towards the end of their lives. Given this, it is unsurprising that a key driver of financial help is the death of a grandparent as parents look to share and pass on some of their inheritance with their own children at a time when it could have a big impact.
With grandparents living longer, this windfall of inheritance comes later and later in life. Data from the English Longitudinal Study of Ageing suggests that the majority of people receiving inheritance are now over 50 years old themselves. As the time at which we inherit gets later and later in life it could be that it occurs at a time when parents themselves are in greater need than their children. The transition to retirement for these parents can be financially difficult and the provision of inheritance can help.
Conversely, the delay for grandchildren means that they are a little older and have passed many of the major milestones and so are no longer in need. This means that traditional means of transmitting wealth from older generations to younger generations could become increasingly misaligned. One potential solution that is often put forward is to provide ways for older generations to unlock their wealth through financial instruments like equity release. However, living longer is expensive and these are financial resources that older generations will likely need for themselves. Overall, the future of the Bank of Mum and Dad therefore looks uncertain as not only does it tend to provide help disproportionately to those with wealthy parents but even this help seems to be conditional on unrelated windfalls. Each political party has its own position on this dilemma but none of the political parties appear to have captured the complexity of intergenerational issues.
The Sandwich Years
Most discussions stop after mentioning the Bank of Mum and Dad, but it is important to view the complex interdependencies between generations within their wider context. The Bank of Mum and Dad sits in a very peculiar period in life which researchers often refer to as the Sandwich Years. This is because between the ages of 50-70 individuals tend to have children who are young adults and going through the tricky early phase of adulthood and all the challenges it represents. Yet their own parents are also often entering a later phase in life in which they increasingly need care or assistance. Not only that, but individuals are also trying to navigate their own tricky transition to retirement and all the challenges and adjustments that brings. This situation is increasingly common because over the last half a century the average age for childbearing has gone up which means that you are a little bit older when your kids leave the nest and a substantial increases in life expectancy which means parents are around for longer. This places the Bank of Mum and Dad in a far clearer context.
The current generation of 50-70 year olds were born between 1945 and 1965 and are generally referred to as the boomer generation. There have been many polemics on the selfishness and greed of this generation.(2) It is said that they introduced tuition fee’s after they themselves had benefited from a free education and it is asserted that they indulge in nimbyism and block new housing projects having benefited from right to buy in 80’s. They also supposedly draw on final salary pensions only for those who follow them to have them withdrawn. It is a common argument and perhaps there are some granules of truth in it. However, this generation is also one that is currently going through the sandwich years of life.
The lengthening of retirement ages to 68 will cover most of these individuals and, at this age, more than 40% of people have a living parent – this is even higher when you include parents-in-law.(3) Then we can combine this with the fact that the average age of an individual’s oldest child at this time is 29. So these individuals are at an age when you are likely welcoming your first grandchildren and helping your offspring buy their first family home. The boomer generation, therefore, find themselves at the heart of often contradictory demands that put pressure on their time, finances and their own well-being. If parents are expected to provide support to their kids through the early stages of adulthood then it is important to consider the other pressures felt by parents at this stage in life and develop policy solutions that enable them to better support younger generations.
So what practical policies could support the boomer generation during these Sandwich years? There are an unlimited number of options but they broadly fit under a set of policies that already exist for an earlier period in life called work-life reconciliation policies.(4) These policies have been developed over the last few decades in order to address the increase of female employment and its implications for parenthood. These policies have included increased childcare vouchers, better paid maternity leave and more flexible and extensive parental leave. These policies have been reasonably successful even if there remains room for improvement.
Yet there remains an opportunity to extend these policies to older generations. As with previous work-life reconciliation policies, the aim is to keep employment levels up whilst allowing individuals to also meet their family obligations. In reality this could include additional paid leave for those with semi-dependent relatives such as grandchildren or elderly parents, or flexible working hours so that individuals can combine work with care responsibilities. Particularly amongst women, we see many choosing early retirement as a way of meeting new care responsibilities and this can have long term consequences for their own financial situation. If these women were able to continue working for longer whilst also helping with grandchildren and their own parents, it might go some way to squaring the circle of the sandwich years.
But what does all this have to do with tuition fees and helping children buy their first home? As previously mentioned, we know that those who are still working are far more likely to help their kids with the costs of education or housing than those who have retired. If we help the boomer generation work longer it will enable them both the finances and time necessary to help others in the family. It also helps the public purse as a longer working life means more time paying taxes and less time drawing a pension. It is a solution that makes our demographic future more sustainable whilst also addressing the practicalities of a rapidly changing life course.
It is all too easy to dismiss the boomer generation as selfish and self-interested. The boomers themselves are often the most likely to indulge in an anti-boomer tirade as some sort of cathartic self-deprecation. David Willets (born 1956) is a great example of this, claiming that his generation stole their children’s future.(2) But this self-deprecation is not particularly constructive and it is necessary to take a careful look at the lives of this generation in order to understand the complex and competing demands they face. Only then can families be strengthened and adapted to address modern demographics. Through policies that enable this generation to work longer whilst supporting their family would go a long way to easing demographic pressures in terms of employment, care and support for younger generations. But any political party still not convinced should remember that there are 15.1 million boomers in the UK and simple policies that support them could be vote winners come May.
(1) Emery, Thomas. “Intergenerational transfers and European families: Does the number of siblings matter?” Demographic Research 29 (2013).
(2) Willetts, David. The Pinch: How the baby boomers took their children’s future-and why they should give it back. Atlantic Books Ltd, 2010.
(3) Marmot, M. et al. , English Longitudinal Study of Ageing: Waves 0-6, 1998-2013 [computer file]. 21st Edition. Colchester, Essex: UK Data Archive [distributor], July 2014. SN: 5050.
(4) Lewis, Jane. “Work/family reconciliation, equal opportunities and social policies: the interpretation of policy trajectories at the EU level and the meaning of gender equality.” Journal of European public policy 13.3 (2006): 420-437.
Tom Emery is a Researcher in Social Policy and Demography at the Netherlands Interdisciplinary Demographic Institute.
Image: ‘Grandparents’ – flickr/Katie Whitney