H2: The latest research unpacking under 40s’ attitudes to retirement and intergenerational wealth has revealed some thought-provoking insights.
Firstly – and this shouldn’t come as any great surprise – Australians under 40 hold concerns about housing unaffordability and its impact on their wealth in retirement. Along with super, the home is one of the key pillars of retirement wealth, so they’re right to be concerned.
But what’s more interesting is that despite rising debt and difficulties buying a property, most under 40s are not relying on the so-called ‘bank of mum and dad’ to secure their financial futures. In fact, half of those surveyed believe they will need to financially support their parents as they age.
Intergenerational wealth, inheritance and financial support are sensitive topics of conversation for parents and kids, particularly when there are multiple children with different financial needs. They’re not subjects easily raised at a Sunday family lunch.
But with an estimated $3.5 trillion set to be transferred from parents to their kids in the next 20 years, and the financial challenges currently facing younger Australians, it is something we must be more open to talking about.
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One reason why older Australians aren’t talking to their kids could be that they’re uncertain about their own financial futures. We know from the Intergenerational Report that a large number of retirees draw down at the legislated minimum on their super balance and leave a significant proportion unspent. Many have a misplaced fear their savings won’t go the distance owing to an uncertainty about how long they’ll live and the potential need for aged care and associated costs. As a result, they are battening down the hatches and under-spending in retirement.
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Perhaps one of the reasons kids aren’t asking their parents for financial assistance or raising wealth-related questions is because they know that their parents have these financial concerns.
Lifting the financial confidence of retirees is arguably one of most important socioeconomic challenges and opportunities our nation faces, as it unlocks so many benefits.