More than two-thirds of retirees are unwilling to scale down their retirement lifestyle to help their children deal with financial hardship, despite many believing the younger generation faces harder challenges then they did at the same age, according to AMP.
The financial services firm found, via a survey of 2000 people aged 50 and over and 30 and under, that 80 per cent of those aged 65 and over believed their children were facing more difficult financial circumstances than they did.
At the same time, 70 per cent of that group would not compromise their retirement and 80 per cent would not downsize to release funds to provide financial assistance to their children.
Despite these findings, AMP also found three-quarters of respondents aged 65 and over believe it is important to pass wealth onto their children and around half of those aged 50 and over would consider passing home equity value to them if they could stay in the family home.
AMP retirement director Ben Hillier noted another leading way parents were offering support was by providing a place to live in the family home, which was reflected in Melbourne Institute research showing half of Australians aged 18 to 29 are still living at home.
Hillier said the strong attachment to property was consistent with Productivity Commission data showing 90 per cent of all intergenerational wealth transfer occurs through death inheritance, typically when children are aged 50.
“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,” he added.
“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 well-being.
“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.”
