Baby boomers can’t rely on the old folks

Australian baby boomers will have to save for their own retirement rather than rely on inheritance handouts, as existing retirees are living longer and increasingly opting to spend their savings on their own retirement, a new report has revealed.

The report, released by the National Centre for Social and Economic Modelling (NATSEM), reveals that four out of five baby boomers may miss out on a significant inheritance despite a massive growth in wealth held by older Australians.

TheAMPsponsored report found the accumulated wealth per Australian had more than tripled since the 1960s, which will result in an estimated $70 billion available for bequest by 2030.

However, it found the wealth to be unevenly distributed and that the changing lifestyles and attitudes of retirees means their children should not rely on receiving a windfall.

“Elderly people no longer feel obliged to leave their children a large inheritance, with many preferring to leave money to their grandchildren or even a charity,” NATSEM director Professor Ann Harding said.

“There has also been the emergence of a new desire for retirees to ‘spend the children’s inheritance’ in their old age which, in the bigger picture, could potentially reduce the total amount of intergenerational wealth in this country by $11 billion alone.”

The report, titledWealth and Inheritance: You can’t rely on the old folks’money, claimed most baby boomers have not saved enough to ensure a financially comfortable retirement, and that many were counting on an inheritance to help see them through.

AMP’s Australian Financial Services managing director Craig Dunn said, “For many baby boomers, it’s getting to crunch time.”

He said it was the job of the financial services industry to provide solutions.

“There is a tendency in the industry to shy away from raising these issues and to continue responding to the boomers’ desire to enjoy their lifestyle,” Dunn said.