Gen Y is coming for your money

Yesterday Australia’s two largest news organisations led with the same story, that families are ‘being torn apart’ by the need for more than a quarter of 16-34 year olds to use ‘their’ inheritance to buy their own home. Seriously?

It gets worse as you read on.

First up, News Corp’s Sophie Elsworth breathlessly declares that ‘exclusive’ new figures released by ‘debt solutions’ agency Fox Symes reveal that 17 per cent of those hoping for a handout from a deceased family member will use this money to purchase or pay off a home. Ms Elsworth goes on to quote Fox Syme Executive Director Deborah Southon: “Anyone crossing their fingers for an inheritance is putting themselves in a situation that may not eventuate.” And that, “It’s terrifying and really the only person you can rely upon is yourself.”

But wait, there’s more from Ms Southon: “Parents don’t necessarily disclose their financial situation to their children and there’s certainly the Baby Boomers who are going to indulge themselves.”

Meanwhile over at Fairfax, reporter Sue Williams who was responsible for the ‘families are being torn apart’ quote revealed scarily similar ‘research’ which was attributed to “a survey of 1000 Australians commissioned by Slater and Gordon lawyers”.

Slater and Gordon associate Lara Nurpuri was quoted in the Fairfax article saying: “What we’re increasingly seeing in some situations is children counting on an inheritance from their family to give them the deposit they need to break into the market.

“We have seen many instances where this created tensions that have led to estrangements where inheritances are reduced or children are cut out of a will completely …There’s a lot of infighting and heartbreak happening.”

It is difficult to define whether these two ‘surveys’ are separate or whether Slater and Gordon commissioned Fox Symes to conduct research on their behalf. Either way, there is no detail on how such survey(s) were conducted, and such scant information on how deeply one might trust the results. It seems fair to question the assertion that families are suddenly being ‘torn apart”.

Opinion: Sorry kids, don’t come to me for an inheritance

I would walk over hot coals for both our adult daughters. And for my 44-year-old step son. But this does not mean I feel compelled in any way to leave them an inheritance. Why should I?

Once again we are witnessing a cheap attempt by mainstream media to beat up a fake intergenerational war based on so-called research on inheritances conducted by either a ‘debt solutions’ company or an estate planning division of a legal firm. The old Latin question Cui Bono? (who benefits) is entirely apt. The ‘debt solutions’ company will stand to gain if we are concerned about our ability to cover our debt – see its recent press releases here if you want to feel totally uncomfortable about your financial situation.

And the estate planning division of a national law firm will be happy to receive enquires about inheritance planning and wills, to state the bleeding obvious.

So what does this mean for retirees and their assets? First up the statement that Baby Boomers ‘are going to indulge themselves’ is simply bullshit. Sorry, but there’s no other word. Most Baby Boomers have not benefitted from decades of superannuation that will ultimately benefit Gen X and Gen Y. Most are entirely underfunded for the long years in retirement, with about 70 per cent needing a full or part Age Pension. This overwhelming majority belongs to the major retirement tribes as defined by The Australia Institute, based on reliable research– the cash strapped and constrained. Living longer is great news, but who has had the chance to save enough to fund an extra 25 or 30 years?

And with Aged Care now a ‘user-pays’ system, there’s end-of-life planning and costs that previous generations of retirees never faced. Add this to the growing precarious nature of work for all generations, and there’s no guarantee that any boomer will be able to work long enough to fund a comfortable retirement.

Thus, to my kids, let’s be honest up front. I have no idea if I can fund my retirement at this stage – there are far too many variables and the way successive governments keep moving the goal posts means I’m less sure of the outcome than ever before. So let’s strike a deal. Your dad and I have done our best to feed, clothe and educate you through to your 20s. We will continue to work and will not come to you for money to help us in our retirement. So please don’t come to us to fund your need for a home – or wait around hoping for an inheritance to help you buy one – this aint going to happen.

What do you think? Are you helping adult children with their housing needs? Will you leave an inheritance for them? Or are you flat out funding your own living expenses?

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The truth about retirement affordability
Managing inheritance expectations

Written by Kaye Fallick

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