The conflicting priorities facing retirees and the never-leave-home generations

From

Ben Hillier

New AMP research has found 4 in 5 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.

Despite wanting to support their children, 7 in 10 aged 65 and over said they were unwilling to compromise their retirement lifestyle to provide financial assistance. Retirees also hold a strong attachment to the family home, with a reluctance to downsize to release funds to support their children.

The primary means through which they are willing to support their children is by providing a place to live in the family home. This is leading to more generations living under the one roof, with Melbourne Institute[1].

This 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, with those over 60 set to transfer an estimated $3.5 trillion over the next two decades[2].

The findings match with Productivity Commission data showing 90% of all intergenerational wealth transfer occurs through death inheritance, typically when children are aged 502.

The most recent national Census also highlights 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[3].

Key findings from AMP’s research include:

  • 3 in 4 Australians aged 65+ believe it is important to pass wealth onto their children
  • 4 in 5 Australians aged 65+ believe their children face harder or similar financial challenges now compared with them at the same age
  • 7 in 10 aged 65+ are unlikely to adjust their lifestyles in order to pass wealth onto their children
  • 4 in 5 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

AMP Director, Retirement, Ben Hillier 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.

“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.

“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. AMP Limited ABN 49 079 354 519

“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”.

Access help through your super fund

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

Source: AMP commissioned research

About the research

AMP commissioned Dynata in February 2024 to conduct a survey of 2000 Australians aged 50 years and over and 30 years and under in relation to their attitudes to retirement and intergenerational wealth transferral.

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Notes:
[1] Source: More Australian adult children and living with their parents longer. Melbourne Institute, Hilda Survey, research indicating half of Australians aged 18 to 29 are still living at home.
[2] Source: Wealth transfers and their economic effects. Australian Government Productivity Commission, 7 December 2021.
[3]
Source: Owning a home has decreased over successive generations. Australian Bureau of Statistics, 20 October 2022 .

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