To be ‘selfish’ or not to be? Retirees forced to weigh up options

New research commissioned by AMP found Australian retirees feel the housing crisis has forced them to make a choice between supporting their children or continuing their retirement lifestyle. 

While over 80 per cent of Australians aged 65 years and over who participated in the survey in February said they believe their children are facing similar or worse financial challenges than they did and want to support them, 70 per cent said they were “unwilling to compromise their retirement lifestyle to provide financial assistance”.

The research said this 70 per cent cohort were unlikely to change or adjust their lifestyle to “pass wealth onto their children”, but, due to an affinity with the family home, would consider providing support to their children in related ways.

This included 80 per cent aged 65 and over who said they would not downsize to release funds to their children, but just under 50 per cent of those aged 50 years and over would consider passing home equity value to their children if they could remain in the family home.

This is confirmed by research from the Melbourne Institute published in February of this year, which found 54 per cent of men and 47 per cent of women aged 18 to 29 years old are still living under the same roof as their parents.

This comes as 75 per cent of all those polled and aged 65 years and over said they believe it is important to pass wealth onto their children.

“As housing unaffordability and cost-of-living pressures rise, Australia’s burgeoning retiree population faces a growing dilemma – how do they help their kids financially, while also fully enjoying their retirement years,” AMP Director, Retirement, Ben Hillier, said.

“Unlocking different options for financial support, beyond accommodation, starts with older Australians having greater comfort with their own finances. We know, for example, far too many retirees are unnecessarily fearful their savings won’t last their lifetime.

“Providing retirees with the financial confidence that their savings will last, will not only help them live life to the fullest, but also give greater clarity with how they can help their kids.

“This confidence can be built in a number of ways, including increasing financial literacy and knowledge through education resources and financial advice, and through the use of solutions that provide greater assurance on lifetime income.

“Given retirees’ attachment to the family home, it’s also clear that as an industry, we need to explore new ways to help retirees unlock capital from their home, without the need to downsize or compromise their long-term wellbeing.”

The AMP research comes as the industry is preparing for an intergenerational wealth transfer phenomenon to occur in the next decade, estimated at $3.5 trillion.