Sorry, kids: older Aussies no longer prioritise leaving an inheritance

By Lucy Dean

October 04 2017
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Older Aussies are “no longer” prioritising leaving behind an inheritance, instead focusing on having a regular income that meets essential needs, a new survey reveals.

Inheritance, retirement, leaving behind an inheritance

A report released on 3 October by lobby group National Seniors Australia and Challenger Annuities found that more than three-quarters of older Australians are “savvy” about retirement, their longevity and are “planning for the possibility of living longer”.

This means that just 3 per cent of respondents plan on preserving all of their savings for the next generation, as compared to 10 per cent who want to spend it all on themselves.

Just 23 per cent of respondents ranked “leaving other assets or investments to the children/estate” as very important, joined by the 26 per cent who listed “leaving the family home to the children/estate” as very important. As such, these were the two least important retirement savings values to respondents.

Most respondents (46 per cent) plan on spending some of their savings while preserving some, and 41 per cent want to spend “most of their savings”.

When it comes to the reasoning behind this trend, the research noted: “Current retirees feel that they had supported the next generation already. There was also a sentiment that the next generation was already better off than current retirees and they felt no obligation to help them further.”

Further, an 80-year-old woman told the researchers: “When discussing modern trends with my contemporaries, I find that we all feel that our children are no longer dependent on our estate, whereas in our turn, our parents’ estates helped us enormously.”

The report also warned that should people help children pull together housing deposits in place of a bequest, they run the risk of impeding their capacity to provide for themselves in their longer life spans.

The report quoted one respondent who said: “‘I helped out with the deposit on the first home for both children so that they could get established in a home of their own. The children received a good education and were able to step into well-paying jobs in Australia. My current income does not cover the cost of running a home and so there will be nothing left to leave the children’.”

Those most likely to intend to keep all their savings for an inheritance were those who were widowed, with 5 per cent of this group indicating this intention. The least likely were those in a de facto relationship (0 per cent).

On the other end of the scale, those most likely to want to spend all of their savings in retirement were those who had never married, with 22 per cent of those in that cohort choosing that option. The least likely to want to spend all their savings in retirement were those who had been widowed, with just 5 per cent of that group choosing that plan.

We’re living longer: are we prepared?

While 86 per cent of respondents were aware that the average lifespan for a 65-year-old in 2017 was six years longer than that of a 65-year-old 30 years ago, 26 per cent confessed to not having made any plans for that “at all”.

Fifty-eight per cent had made financial plans and 55 per cent had thought about health and medical expenses in the future. However, just 42 per cent had made accommodation plans in the event of an increased lifespan. That’s sitting below the 44 per cent who had thought about lifestyle and travel plans, given they may well be living longer.

As for income preferences in retirement, the majority (55 per cent) of respondents favoured an income that varied but was higher on average, 12 per cent leaned towards an income that was highly variable and highest on average and 26 per cent just wanted a fixed income.

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Retirement