What's the primary means through which they are willing to support their children?
Four in five Australians aged 65 and over believe their children face similar or harder financial challenges than they did growing up, amid rising housing unaffordability and rents, new research by AMP has revealed.
Despite wanting to support their children, seven in 10 respondents aged 65 and over are unwilling to compromise their retirement lifestyle to provide financial assistance, with many retirees also reluctant to downsize their homes to release funds to support their children, showing a strong attachment to the family home.
The primary way they are willing to support their children is by providing a place to live in the family home. This trend leads to more generations living under one roof, with Melbourne Institute research indicating half of Australians aged 18 to 29 still live at home.
The new research highlights the attitudes, behaviours, and conflicting priorities impacting the transfer of wealth and financial support from older Australians to their children and grandchildren. Those over 60 are set to transfer an estimated $3.5 trillion over the next two decades.
The findings align with Productivity Commission data showing that 90% of all intergenerational wealth transfer occurs through death inheritance, typically when children are aged 50.
The most recent national census also highlights the new financial paradigm facing younger Australians. In 1991, 25- to 39-year-old baby boomers were three times more likely than 25- to 39-year-old millennials in 2021 to own their homes outright.
“As housing unaffordability and cost-of-living pressures rise, Australia’s burgeoning retiree population faces a growing dilemma – how do they help their kids financially, while also fully enjoying their retirement years,” said Ben Hillier (pictured), director of retirement at AMP.
“Unlocking different options for financial support, beyond accommodation, starts with older Australians having greater comfort with their own finances. We know, for example, far too many retirees are unnecessarily fearful their savings won’t last their lifetime.
Hillier pointed out that providing retirees with the financial confidence that their savings will last, will not only help them live life to the fullest, but also give greater clarity with how they can help their kids.
“This confidence can be built in a number of ways, including increasing financial literacy and knowledge through education resources and financial advice, and through the use of solutions that provide greater assurance on lifetime income,” he said.
“Given retirees’ attachment to the family home, it’s also clear that as an industry, we need to explore new ways to help retirees unlock capital from their home, without the need to downsize or compromise their long-term wellbeing.”
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