Some Australians are banking on inheritance to secure retirement

News & insights

Almost one third of all Australians may be relying on the inheritance to pay off the mortgage and ensure their financial security in retirement, according to recent research from IPSOS and MLC, the Australia today report.

Lifestyle trumps mortgage as a goal for the future

The issue seems to be our ability to pay off the mortgage and maintain our lifestyle, with 78% of Australians agreeing the mortgage has a big impact on their lifestyle, regardless of their wealth.

Australians’ main goals for the future showed that ‘maintaining standard of living’ came out on top, with 67% of Australians citing this as a key goal for the future. Our mortgage still remains a key concern, with almost half of us (48%) indicating that paying off the mortgage is a key goal for the future.

Interestingly, we’re not confident about how we’ll maintain our lifestyle or pay off our mortgages, with 60% of Australians saying that their salary hasn’t kept up with their standard of living.

For many of us, we’re not sure how we’ll manage, and many are leaving the mortgage up to a hopeful inheritance.

Higher lifestyle costs make budgeting difficult

The vast majority of Australians, 83%, believe today’s cost of living is much higher than it was 10 years ago and 69% believe that the high cost of living means that average Australians are struggling to make ends meet.

Many Australians are taking measures to improve their weekly budgets, with 59% shopping at discount supermarkets like Aldo and Costco in order to save money.

Financial professionals offer greater financial security

Many Australians across classes are not confident they have enough assets to support their retirement, so many are relying on the inheritance to pay off the mortgage.

While around 17% are definitely relying on the inheritance to pay off the mortgage, it’s also a possibility for an additional 14%. Interestingly, rates are higher for those in Melbourne, with 22% of people relying on the inheritance and people with children (20%).

Those already engaging the help of a financial professional are less likely to rely on an inheritance to pay off their mortgage or to ensure their financial security. Of those with financial planners or advisers, 77% disagree that they’re relying on the inheritance as opposed to 67% of the total research sample.

Banking on a wish and a prayer

For many Australians, banking on the inheritance may be like banking on a wish and a prayer. Many baby boomers, who spent their 20s and 30s having children and working, far earlier than current generations, are now looking forward to enjoying their retirement, spending money traveling overseas and buying gifts for their children and grandchildren.

Laura Demasi from IPSOS Research agrees. “The baby boomers are the biggest travellers. The idea of spending the kids inheritance isn’t ideal for them and most would like to give something to their children, but a lot will be forced to take out reverse mortgages for aged care.”

The baby boomers are also living longer, and the longer we live, the more reliance we have on aged care assistance. The need for aged care is growing in Australia and many of our parents will need to draw down on their mortgage to help pay for aged care facilities.

Contact us

To find out more about the information in this article, please contact Charles Choong on 03 9654 9886, or you can send an email to firstpacificfs@gmail.com for more information.

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Resourced from: MLC News & Insight http://insights.mlc.com.au/retirement/2016/04/some_australiansare

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This publication has been prepared by Charles Choong (ARN 244 731) is an Authorised Representative of Professional Investment Services (ABN 11 074 608 558), Australian Financial Services Licence 234 951.

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