Fred is 62 and Mary is 59. They have a son Gary who is 30; he is married to Jane, aged 31. They have a two-year-old daughter, Zoe.
Gary and Jane wish to get on the housing ladder. They had saved a sizeable deposit before the coronavirus epidemic however at lockdown, Gary was furloughed. Jane worked as a personal trainer, with her mother-in-law helping with the babysitting.
Because of the timing of Zoe’s birth, Jane doesn’t qualify for the Self-Employed Income Support Scheme; all she can claim is Universal Credit.
Their biggest outgoing is their rent and their tenancy agreement comes up for renewal in the Autumn. During lockdown, they are trying not to use any of the savings for their deposit but are finding that difficult so their savings are going down instead of increasing at the rate they had planned.
Gary is worried about his future; even if his employer survives the lockdown, he believes his earnings prospects for the next year or two may be less than his furloughed income. It has taken Jane 18 months to build up her client base – she understands that several of her clients may not be in a position to pay for a personal trainer as the restrictions are lifted. They feel they are in need of help.
They have broached the subject of moving in with Fred and Mary. Fred can see nothing but problems, Mary can only see the advantages of having her granddaughter with her more. You can imagine the discussions they are having.
Fred and Mary are comfortable. They own three-bedroom suburban semi-detached house with no mortgage. Fred is a surveyor for a large construction company and his earnings and employment prospects for the next few years seem secure.
Mary works as a ‘virtual PA’ from home, which she combines with childminding Zoe. She has been able to claim government support. She does not anticipate losing clients and uses one of the bedrooms for her work. So essentially the house is a two-bedroom semi.
Fred’s first objection is that the house is not big enough, to which Mary responds, “Why don’t we build an extension?”
Fred’s next objection, is, “I don’t want to borrow money to extend the house at this time in our life. Both of our pensions have been hit by the fall in investment markets.” Mary has taken a contribution holiday on her pension. “It already looks like we will have to work another year or two to be able to afford the retirement we have promised ourselves,” she counters.
Mary is really attracted to the idea of spending more time with Zoe. She is not going to give up easily. Also, as a PA she has plenty of experience in encouraging others to talk while she listens.
“What if we could find a way of extending the house without adding to our outgoings?” she asks. Fred looks at her perplexed. “I know someone who has built a granny annexe so that their mother no longer had to rent and they could keep an eye out for her as she entered her final years. They used something called equity release. They do not have to pay any interest on the money they used to build the annexe, and the annexe had added to the value of their home.” Fred believes there must be a catch.
Mary, however, is not going to give up easily. “Well they were very thorough; they would not do anything without considering all the pros and cons, especially the cons. They used a specialist adviser and a firm of solicitors who ensured they fully understood what they were getting into.
“Gary and Jane have worked really hard to get so close to owning their own place. With just a little bit of help from us we can help get them over the line. Shall I find out who the adviser they used was and make an appointment to see them? What have we got to lose?”
The impacts of the virus and lockdown are going to mean that many families are going to have to revise their plans. The Bank of Mum and Dad (or son and daughter) is going to be called upon to get a number of people back on track whilst the economy recovers. The trouble is that Mum and Dad may themselves be concerned about the impact of the crisis on their pensions and retirement plans.
Later life advisers may find themselves busier than ever as we come out of lockdown.
Bob Champion is chairman of the Air Later Life Academy