Sky-high expectations around inheritance likely to fall flat, as older Australians face retirement uncertainty
Data from Colonial First State (CFS) has revealed that Australians aged 18 to 29 are banking on a substantial inheritance, estimating they'll receive an average of $525,000.
This figure factors in assets such as the family home and remaining superannuation.
But those expectations, CFS warns, could be setting them up for a harsh financial reality check.
'When you think about what older Australians are staring down the barrel of including longevity and rising aged care cost, this ($525,000) expectation is going to come under a lot of pressure,' CFS head of technical services Craig Day told NewsWire.
'A lot of the assets that are earmarked to be paid out as an inheritance may in the future be needed elsewhere.'
These findings come amid growing reliance on intergenerational wealth transfers, with many younger Australians facing stagnant wages, skyrocketing living costs and an increasingly unaffordable housing market.
'Young people are increasingly relying on the wealth of their parents or grandparents due to rising living costs, stagnant wage growth and housing pressures,' said CFS chief executive of superannuation Kelly Power.
'At the same time, older generations are navigating the complexities of retirement planning. They want to support their families while ensuring their own financial security.'
CFS notes that while many older Australians still plan to leave something behind, their estimates of what will remain may fall short. Core assets like the family home, super and vehicles are typically the main sources of inheritance.
But other investments, including property portfolios, are now often used to fund retirement.
Mr Day is urging families to confront the issue now, rather than waiting until it's too late.
'It's important that young and old can discuss their expectations and plans openly. By having these conversations early, families can ensure that everyone is on the same page and can make informed decisions that align with their values and goals,' he said.
'It's never too early to start planning for retirement.'
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