The challenges facing an ageing Australia
An ageing Australia may in fact spell good news for Australian financial planners, according to Alex Dolan from the Department of Family and Community Services (FACS).
Drawing on research from various sources, Dolan says the department believes that while retiring clients are likely to be older in the future than they are currently, they are also likely to retire wealthier.
This, he says, is largely because people are preparing for retirement more than they ever have in the past thanks, at least in part, to superannuation.
“They will be an older client group but they will have more resources,” he says.
Speaking at theFinancial Planning Association(FPA) annual convention, Dolan will present a broad-brush picture of changes to Australian demographics that will present challenges for both financial planners and the Government.
But he has both good news and bad news.
The bad news is that because of a growing trend amongst Australians to have children later in life, many financial planning clients in their forties are likely to have young children aged under 18 still living at home with their parents.
“Generally it has been assumed that people in this age group have moved beyond family responsibilities,” he says. “But FACS data suggests that many people in their forties have young children still at home.”
Complicating this trend is a related tendency for children to live at home longer. Where previously children left home shortly after finishing high school, more young people are preferring to live at home with their parents for an extended period of time.
The ongoing responsibilities clients have for children will present a planning challenge for financial planners.
Dolan says that an ageing Australian population will also place greater demands on social services, and the challenge for the Federal Government is to ensure better social and economic outcomes through increased workforce participation.
“These mature age groups are currently not participating in the workforce,” he says, “and the Government’s challenge is to proportionally increase the number of older people working.”
The pension will be subjected to more rigorous means testing as time goes by and will ultimately only be available to those most in need.
Dolan says the Government and the financial planning community both face the challenge of boosting retirement income by encouraging mature age work participation and discouraging reliance on the aged pension.
Alex Dolan will make his presentation,Impacts from an Ageing Australia,to the FPA Convention on Thursday, October 9 at 9:45am.
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