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Retirees face dilemma in supporting children amid housing affordability crisis, AMP research finds

  • June 03 2024
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Retirees face dilemma in supporting children amid housing affordability crisis, AMP research finds

By Newsdesk
June 03 2024

New research from AMP has revealed that four in five Australians aged 65 and over believe their children face similar or harder financial challenges than they did growing up, largely due to rising housing unaffordability and rents. Despite wanting to support their children, 70% of those aged 65 and over said they were unwilling to compromise their retirement lifestyle to provide financial assistance.

The research highlights the conflicting priorities impacting the transfer of wealth and financial support from older Australians to their children and grandchildren, with those over 60 set to transfer an estimated $3.5 trillion over the next two decades. However, Productivity Commission data shows that 90% of all intergenerational wealth transfer occurs through death inheritance, typically when children are aged 50.

The most recent national Census also underscores the new financial paradigm facing younger Australians, with 25–39 year-old Baby Boomers in 1991 three times more likely than 25–39 year-old Millennials in 2021 to own their home outright.

Key findings from AMP's research include:

  • 75% of Australians aged 65+ believe it is important to pass wealth onto their children
  • 80% of Australians aged 65+ believe their children face harder or similar financial challenges now compared with them at the same age
  • 70% aged 65+ are unlikely to adjust their lifestyles in order to pass wealth onto their children
  • 80% aged 65+ are not prepared to downsize to release funds to their children, but close to half of those aged 50+ would consider passing home equity value to their children if they could stay in the family home

Ben Hillier, AMP Director of Retirement, said, "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."

Hillier emphasized the need for retirees to have greater comfort with their own finances, noting that far too many are unnecessarily fearful their savings won't last their lifetime. He suggested that providing retirees with financial confidence can be achieved through increasing financial literacy and knowledge, as well as using solutions that provide greater assurance on lifetime income.

Given retirees' strong attachment to the family home, Hillier also highlighted the need for the industry to explore new ways to help retirees unlock capital from their home without the need to downsize or compromise their long-term wellbeing.

Australians can build their financial confidence in retirement by taking advantage of intra-fund advice services offered free of charge by most super funds. AMP, for example, has dedicated retirement experts who provide free consultations to its superannuation members on planning for retirement.

Retirees face dilemma in supporting children amid housing affordability crisis, AMP research finds

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  • June 03 2024
  • Share

New research from AMP has revealed that four in five Australians aged 65 and over believe their children face similar or harder financial challenges than they did growing up, largely due to rising housing unaffordability and rents. Despite wanting to support their children, 70% of those aged 65 and over said they were unwilling to compromise their retirement lifestyle to provide financial assistance.

The research highlights the conflicting priorities impacting the transfer of wealth and financial support from older Australians to their children and grandchildren, with those over 60 set to transfer an estimated $3.5 trillion over the next two decades. However, Productivity Commission data shows that 90% of all intergenerational wealth transfer occurs through death inheritance, typically when children are aged 50.

The most recent national Census also underscores the new financial paradigm facing younger Australians, with 25–39 year-old Baby Boomers in 1991 three times more likely than 25–39 year-old Millennials in 2021 to own their home outright.

Key findings from AMP's research include:

  • 75% of Australians aged 65+ believe it is important to pass wealth onto their children
  • 80% of Australians aged 65+ believe their children face harder or similar financial challenges now compared with them at the same age
  • 70% aged 65+ are unlikely to adjust their lifestyles in order to pass wealth onto their children
  • 80% aged 65+ are not prepared to downsize to release funds to their children, but close to half of those aged 50+ would consider passing home equity value to their children if they could stay in the family home

Ben Hillier, AMP Director of Retirement, said, "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."

Hillier emphasized the need for retirees to have greater comfort with their own finances, noting that far too many are unnecessarily fearful their savings won't last their lifetime. He suggested that providing retirees with financial confidence can be achieved through increasing financial literacy and knowledge, as well as using solutions that provide greater assurance on lifetime income.

Given retirees' strong attachment to the family home, Hillier also highlighted the need for the industry to explore new ways to help retirees unlock capital from their home without the need to downsize or compromise their long-term wellbeing.

Australians can build their financial confidence in retirement by taking advantage of intra-fund advice services offered free of charge by most super funds. AMP, for example, has dedicated retirement experts who provide free consultations to its superannuation members on planning for retirement.

Retirees face dilemma in supporting children amid housing affordability crisis, AMP research finds

New research from AMP has revealed that four in five Australians aged 65 and over believe their children face similar or harder financial challenges than they did growing up, largely due to rising housing unaffordability and rents. Despite wanting to support their children, 70% of those aged 65 and over said they were unwilling to compromise their retirement lifestyle to provide financial assistance.

The research highlights the conflicting priorities impacting the transfer of wealth and financial support from older Australians to their children and grandchildren, with those over 60 set to transfer an estimated $3.5 trillion over the next two decades. However, Productivity Commission data shows that 90% of all intergenerational wealth transfer occurs through death inheritance, typically when children are aged 50.

The most recent national Census also underscores the new financial paradigm facing younger Australians, with 25–39 year-old Baby Boomers in 1991 three times more likely than 25–39 year-old Millennials in 2021 to own their home outright.

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Key findings from AMP's research include:

Retirees face dilemma in supporting children amid housing affordability crisis, AMP research finds
  • 75% of Australians aged 65+ believe it is important to pass wealth onto their children
  • 80% of Australians aged 65+ believe their children face harder or similar financial challenges now compared with them at the same age
  • 70% aged 65+ are unlikely to adjust their lifestyles in order to pass wealth onto their children
  • 80% aged 65+ are not prepared to downsize to release funds to their children, but close to half of those aged 50+ would consider passing home equity value to their children if they could stay in the family home

Ben Hillier, AMP Director of Retirement, said, "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."

Hillier emphasized the need for retirees to have greater comfort with their own finances, noting that far too many are unnecessarily fearful their savings won't last their lifetime. He suggested that providing retirees with financial confidence can be achieved through increasing financial literacy and knowledge, as well as using solutions that provide greater assurance on lifetime income.

Given retirees' strong attachment to the family home, Hillier also highlighted the need for the industry to explore new ways to help retirees unlock capital from their home without the need to downsize or compromise their long-term wellbeing.

Australians can build their financial confidence in retirement by taking advantage of intra-fund advice services offered free of charge by most super funds. AMP, for example, has dedicated retirement experts who provide free consultations to its superannuation members on planning for retirement.

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