If your children are expecting a large windfall when you pass away, the money experts from Connect Financial Services Brokers say they’re likely to be disappointed. They told Money Management magazine most Baby Boomers will need to whittle down any funds set aside for children to maintain a comfortable standard of living during retirement.
Paul Tynan, the chief executive of Connect Financial Services Brokers, said that longer life expectancies and the high cost of day-to-day living have all led to lower retirement balances. He added that many Baby Boomers have also supported their children early in their adult lives, by gifting them with cars, house deposits, and educational opportunities, leaving less money for an inheritance down the track.
However, poor savings habits may be the biggest problem, according to Mr Tynan, who says that superannuation and the family home are the only assets many Australians take into their retirement.
“Australians have always been poor savers, hence the Federal Government introducing compulsory superannuation and related taxation incentives,” he explained.
“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.”
The pension, superannuation funds, and assets will all typically be required to fund a comfortable and ideally long retirement. Maintaining a sound standard of living will be a greater priority for most Baby Boomers than providing for their children once they’re gone. This led Mr Tynan to declare that “The great intergenerational transfer of wealth is just not going to happen.”
Are you worried that your parents may not pass on the inheritance you hope for? Do you want to make sure you can leave money for your children when you go? Chase Edwards can help. Call us today on 1300 854 833 to organise your free financial health check and learn the strategies you need to achieve your financial goals.