Older Australians are facing conflicting demands when it comes to supporting their children and enjoying their retirement.
New research from AMP reveals that despite recognising how hard it is to buy a house and wanting to help financially support their children, seven out of 10 people aged over 65 said they were unwilling to greatly compromise their lifestyle to do so.
The research found that contrary to popular opinion, four out of five older Australians recognised their children faced harder or similar financial challenges compared with their situation at the same age.
Staying at home
However, notwithstanding financial incentives to downsize, four out of five of those surveyed who were aged over 65 said they did not want to downsize to release funds to their children, but almost half of those aged 50-plus would consider passing home equity value to their children if they could stay in their family home.
The federal government’s downsizer scheme allows those aged 55 or older to contribute up to $300,000 (or 600,000 per couple) from the sale of their house tax free into their superannuation fund. According to the latest data, only about 60,000 people have taken up the scheme.
However, they are happy to have their children stay and live at home for longer.
A Melbourne University report found just over half of young men (54 per cent) and 47 per cent of young women aged 18 to 29 years old are still living under the same roof as their parents.
According to the AMP research, the top 11 things retirees would consider to support their children financially are:
- provide accommodation, 20 per cent
- pay bills, 15 per cent
- curb lifestyle spending, 12 per cent
- delay or avoid aged care, 11 per cent
- avoid going on holidays, 10 per cent
- share subscription services, 9 per cent
- downsize or relocate, 7 per cent
- contribute to their mortgage, 6 per cent
- sell investment property, 3 per cent
- sell the family car, 3 per cent
- delay retirement, 3 per cent.
More support
AMP retirement director Ben Hillier said retirees who wanted to give money to their children needed more support and assurances that they would not outlive their savings.
“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 said.
“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.”
Mr Hillier said providing retirees with the financial confidence that their savings will last should improve their lifestyle and give clarity as to how they can help their children.
“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.”
AMP surveyed 2000 Australians aged 50 years and over, and 30 years and under, about attitudes to retirement and intergenerational wealth transfer for the report.
Do you think the younger generations are struggling financially? Do you help your children out? Why not share your experience in the comments section below?
Also read: Am I eligible for the downsizer scheme?