If was Corporal Jones from Dad’s Army who used to utter that immortal phrase, “don’t panic”. It’s advice retirees watching the value of their portfolios shrink in response to Trump’s economic nostrums should heed.
While the APRA funds benefited from a surge in overseas equity markets in 2022-23, over the past five years to June 30, 2023, SMSFs have outperformed them, on average, by 1.2 percentage points a year.
Retirees can rest easy – the children are not after the family jewels
Retirees can draw comfort from the second phase of AMP’s research examining Australian attitudes to the intergenerational wealth transfer with the majority of under 40s determined to run their own financial race.
The research, which is founded on the premise that $3.5 trillion will change hands over the next two decades, challenged the assumption that the younger generations were financially treading water as they waited to inherit from their retired parents.
In particular, the bank of mum and dad has become a focus as a means for retirees to pas on their wealth, with the belief often being that they are being pressured into doing so – even at their own financial cost.
But this research vigorously challenges this supposition, showing that four out of five under 40s haven’t asked their parents for any financial support, three in five haven’t spoken to their parents about the wealth transferral and only one in five relying on financial assistance and inheritance from their parents for their future financial security.
Quite the contrary, with 50 per cent of these younger Australians expecting to assist their parents as they age.
These findings are not the result of any unbounded optimism by under 40s about their financial futures, with three in five believing their generation has it harder financially than their parents did, a number that increases to seven in 10 for those under 29.
Moreover, four out of five who don’t own a property believe it will be out of reach, with the same number thinking that not owning a property will be detrimental to their long-term wealth in retirement.
The findings follow the first phase of AMP’s intergenerational wealth research showing that retirees want to support their children but are also concerned about their own financial security and lifestyle.
AMP director of retirement Ben Hillier said this latest research revealed an interesting dynamic within families – a lack of communication between the generations on wealth matters.
“It’s also evident that 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 their parents for financial support, with many believing they will need to financially support them as they age.
“It’s worth considering these findings with the knowledge that many retirees are fearful their savings won’t last – a fear that has an impact on their quality of life. It’s also very possible these concerns are inadvertently conveyed to their children and hinder open dialogue on wealth matters.”
Hillier added that there was a significant opportunity in Australia to help more retirees build their financial confidence, empowering them to fully enjoy their post-working years.
“This can be achieved through better access to lifetime income solutions and financial advice, improved financial literacy at all ages and a simplified retirement system.
“Most importantly this confidence could improve their quality of life in retirement, but it could also be a catalyst to open the lines of communication with their children on important wealth matters, such as inheritance and estate planning. It may even empower them to support their children financially, which we know from our previous research they’re keen to do.
“Importantly, the sharing of knowledge and insights could help build greater collective financial literacy and confidence within the family unit.”
AMP Bank group executive Sean O’Malley (pictured) said: “Building the financial confidence of retirees and finding better ways to unlock home equity will empower more older Australians to support their kids.
“While this needs to be tackled at a macro level by federal and state governments, there are other, more immediate options for younger Australians wishing to purchase their first property. For example, AMP’s research has indicated a strong willingness of younger Australians to consider joint property ownership with family and friends.”
