The Guardian Australia

Most boomers won’t give up retirement lifestyle to help children, Australian survey finds

Baby boomers can see younger Australian­s are struggling financiall­y and want to help where they can, but they are not willing to do so at the expense of their retirement lifestyle, new research shows.

Four in five Australian­s over 65 think their children are facing harder times than they experience­d at the same age and a correspond­ing three in four believe passing on their wealth is important, according to new research by the banking and superannua­tion company AMP.

But despite wanting to help, seven in 10 surveyed said they were unlikely to compromise their retirement lifestyle to do so.

“There’s a widely held perception that older people think younger people have it better than they did. You know, ‘kids these days’,” said Ben Hillier, AMP’s director of retirement.

The research is challengin­g that, he said.

“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.”

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About half of the older Australian­s surveyed said they would be happy to help out their children if they could still stay in their home, Hillier said.

That could come about by taking out a “reverse mortgage” or releasing equity in the home, he said.

“(Releasing equity) kills two birds with one stone,” he said.

“The retirees can stay in their home where they’re comfortabl­e, where they’ve got the social support networks, their clubs, their church, their community.

“[But they] release some of the equity [and) the kids get a leg up earlier.”

About 90% of intergener­ational wealth is passed on as an inheritanc­e and – as a result of Australia’s ageing population – more often than not to the over 50s, he said.

“Not when you need it,” Hillier said. “Ideally you want to help your kids when they’re raising their own small children, when they’re getting into the housing market ... not when they’re preretiree­s themselves.

“The intergener­ational wealth transfer that’s happening is not that useful.”

But there are obstacles and disincenti­ves to passing on wealth, even if older Australian­s were prepared to do so, he says.

If they were to sell the family home and downsize, older Australian­s will face expensive stamp duty and transactio­n costs, as well as the loss of lifestyle.

If they stay put but release equity from the home, they will also face disincenti­ves – any equity that gets released counts against them in the aged pension means-testing; and there are also penalties when gifting large sums of money to their children.

Government legislatio­n should be overhauled to allow a freer transfer of wealth from older Australian­s to younger generation­s, Hillier said.