[Brad Lockyer]

Most Aussie baby boomer acknowledge that their children are having a harder time buying a house than they did, and want to help – but not at the expense of their current lifestyle, new research has found.

Banking and investment giant AMP found four out of five Australians aged 65 and over think their children are facing more challenging economic conditions than they experienced at the same age. They also found three out of four believed passing on wealth was important.

But despite that, the same survey found only three out of 10 would be willing to compromise their retirement lifestyle to do so.

Ben Hillier, AMP director of retirement, says the research turns the notion of the out-of-touch Boomer on its head.

“There’s a widely held perception that older people think younger people have it better than they did. You know, ‘kids these days’,” he says.

“But you have this bipolar situation where while they do believe they’re struggling and they do want to help them, they’re not comfortable to do so at the expense of their own lifestyles.

AMP found about 50 per cent would be willing to help their kids out, as long as they could stay in the family home.

Would you be willing to help your kids if it meant compromising your lifestyle? Or are they ultimately responsible for themselves?

[Lorraine Ann Cobcroft]

It’s often not just a case of compromising lifestyle. In many cases, it’s a case of taking unacceptable risks of forfeiting security and the ability to fund essential health treatment and care later in life. Many are moderately comfortable now, but understand the risks that economic changes or unexpected expenses – perhaps for health care – might change their circumstances radically. I suspect aged pension rules and the terms of aged care subsidies are part of the issue. Changed circumstances might create a need for the aged pension or subsidized aged care, and gifting rules mean helping their children now could disqualify them or drastically reduce entitlements. For those already getting even a part pension, gifting to kids could prove very costly indeed – involving not just the cost of the gift itself, but loss of income for years after giving. Guaranteeing a loan for a child might result in a big loss if that child proves to be financially irresponsible, or encounters a crisis.
I also question whether the folk who say they won’t compromise their lifestyle to help kids might be the same folk that have kids who are not really doing it tough, or who are ungrateful. There is wide disparity in society, and I suspect it’s more than likely that the more affluent retirees generally have kids who are also among the more affluent, or, in some cases, who should be affluent but are not financially responsible. And then there is the risk of separation or divorce meaning a son or daughter is left struggling while their errant partner runs off with at least half the benefit of the gift, and potentially a lot more!
I know one couple who sold their home to help kids who promised them a comfortable granny flat behind the acreage home Mum and Dad helped them buy. The couple ended up in a horrid little shed, very uncomfortable and completely neglected – not even allowed to enter the home they helped their son and daughter-in-law buy.
I would urge older folk to be very wary of sacrificing their security and comfort in old age to help their kids. There might be a lot more sacrifice involved than you initially calculate.

[Alan]

My children, all now in their 40’s have recdeived significant financial help when needed. There have been paperless loans from the bank of Mum and Dad and these were repaid as they were able. (I receieved a similar loan from my maternal grandfather prior to marriage so never pqaid rent in Australia from day 1 of our marriage).

We help them as required nd enjoy an excellent relationship with them.

We remain very comfortably off in our retirement and money is not a concern.

[David Ryder]

I have assisted the kids with minor things like small loans and/or gifts but would never enter into any formal arrangement for larger support including going guarantor.
Too many things can go wrong.

[Author]

Posts