Baby Boomers will need to use children’s inheritance
The intergenerational transfer of wealth is not going to happen as Baby Boomers will have to draw down on their wealth for a reasonable standard of living in retirement, Connect Financial Services Brokers believes.
Longer life expectancies, maintaining comfortable lifestyles, and insufficient savings has resulted in lower superannuation balances for retirement, the firm's chief executive, Paul Tynan said.
Tynan said many Baby Boomers supported children early in their adult lives by funding their education or giving them a start with a deposit on the first home or business venture and as a result leaving them very little that can be assigned to inheritance for their Gen X and Y children.
"Australians superannuation system is admired throughout the world, however, for Baby Boomers superannuation and the family home is usually their only savings. Australians have always been poor savers hence the Federal Government introducing compulsory superannuation and related taxation incentives," he said.
"Australia is seen more as a nation of spenders than saves with the majority living from salary to salary so when retirement arrives or is forced upon individuals through illness, health reasons or retrenchment the Baby Boomers will have no option but to apply for the Age Pension.
Tynan said after home ownership costs, motor vehicle costs, health costs, food, clothing are taken into consideration there is not much left over for the retirement.
"Whatever savings, superannuation, investments or assets Baby Boomers have left at the end of their working lives will be needed to fund a longer life and accustomed living standard — more than giving priority to leaving an inheritance legacy for the children," he said.
"The great intergenerational transfer of wealth is just not going to happen."
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