The financial dynamic of families is changing in unexpected ways, with an intergenerational wealth survey showing that many Australians aged under 40 do not expect to follow the ‘tradition’ of relying on the ‘bank of mum and dad’. What’s more, half of Aussies in the same age group actually expect they’ll need to financially support their ageing parents.
These findings, published this week in a survey commissioned by Australian financial services giant AMP, form the second phase of AMP’s research into Australians’ attitudes around intergenerational wealth.
The findings will surprise many, given the concerns surrounding the increasing unaffordability of housing for younger generations.
AMP director of retirement Ben Hillier said: “While many Australians under 40 are concerned about housing unaffordability and its impact on their long-term wealth and retirement, they are reluctant to ask for financial support from their parents.”
An intergenerational communication gap
Although expectations about who’ll be supporting who may have changed, the survey revealed one thing that apparently hasn’t. It seems that generations are still not great at communicating with each other.
Mr Hillier said AMP’s research showed “a lack of communication between the generations on wealth matters”. In fact, the majority – 60 per cent – of under-40s haven’t spoken to their parents about wealth transferral at all.
According to Mr Hillier, this could be the result of parents unknowingly passing their financial future fears onto their children. “It’s worth considering these findings with the knowledge that many Australian retirees are fearful their savings won’t last,” he said.
This fear prevents spending and impacts their quality of life, Mr Hillier said. “It’s also very possible these concerns are inadvertently conveyed to their children and hinder open dialogue on wealth matters.”
How will younger generations manage to buy a house?
The intergenerational concerns older Australians have for housing affordability are real. What sort of reassurance can we get about younger Aussies being able to buy property?
AMP bank group executive Sean O’Malley said that while Australian governments should be tackling this issue on a large scale, the next generation are looking at some innovative solutions. “AMP’s research has indicated a strong [desire]… to consider joint property ownership with family and friends,” he said.
“Fractional lenders, such as Bricklet, specialise in offering this service, and can provide an alternative and lower risk means of joining the property ladder. We would encourage younger Australians to talk to their bank or broker about the different lending options available to them.”
Bricklet is a platform for shared-equity home loans that has partnered with AMP to offer buyers home loans. Mr O’Malley said that such loans provide “a different option for those who haven’t yet saved a large deposit but are earning enough to meet the ongoing financial commitment of a home loan”.
That provides at least some intergenerational comfort for those of us worrying about how our kids might buy a home.
What else did AMP’s intergenerational survey reveal?
Among the survey’s other findings:
- Four in five Aussies aged under 40 who currently don’t own a property believe it will be out of reach.
- The same proportion believe that not owning a property will be detrimental to their long-term wealth in retirement.
- Of Australians aged 50 to 58, 40 per cent said they do not have a will in place.
Perhaps the biggest takeaway from the intergenerational survey is that parents and children could benefit from greater communication. Although many things have changed in the past couple of generations, that advice seemingly remains relevant.
Have you thought about how your children will manage their future living arrangements? Do you think there’s an intergenerational communication gap in your family? Let us know via the comments section below.
Also read: Energy investment in low-income housing needed: ACOSS
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