Most under 40s expect to help ageing parents, AMP finds

Half of people aged under 40 expect to financially support their parents as they get older and are not relying on the ‘bank of mum and dad’, new AMP research reveals.

Young people expect to support mum and dad as they age.

Half of people under 40 expect to financially support their parents as they age and are not relying on the ‘bank of mum and dad’ despite rising housing unaffordability fears.

New research by AMP on attitudes to intergenerational wealth has found most under 40s haven’t spoken to their parents about wealth transferral and only one in five are relying on financial assistance and inheritance from their parents for their future financial security.

The research found three in five under 40 believed their generation has it harder financially than their parents did, increasing to seven in 10 for those under 29.

Of the under 40s, four in five who currently don’t own a property believe it will be out of reach and detrimental to their long-term wealth in retirement.

An estimated $3.5 trillion is set to be transferred by Australians aged 60 plus in the next two decades, with 90 per cent of all intergenerational wealth transferral occurring through death inheritance. AMP director of retirement Ben Hillier said the research revealed 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 for financial support from their parents, with many actually believing they will need to financially support their parents as they age,” said Mr Hillier.

Intergenerational wealth is a vexed issue in Australia.

About 40 per cent of under 40s believe home ownership is the main contributor to wealth in retirement followed by savings (23 per cent) super (18 per cent), investment property (15 per cent), and shares (5 per cent). Eight in 10 under 40s would consider purchasing a property with a friend or a family member. Mr Hillier added many Australian retirees were fearful their savings won’t last – a fear which prevents spending and impacts their quality of life.

“We have a significant opportunity in Australia to help more retirees build their financial confidence, empowering them to fully enjoy their post-working years,” Mr Hillier.

“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 AMP’s previous research they’re keen to do.”

AMP Bank group executive Sean O’Malley said it was also clear from the research that under 40s are concerned housing unaffordability will impact their long-term wealth – a justifiable concern given home ownership is one of the key pillars for wealth in retirement for most Australians. “Building the financial confidence of retirees and finding better ways to unlock home equity would also empower more older Australians to support their kids,” said Mr O’Malley. “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.”