“Those who are happiest are those who do the most for others”.

                                                                                    Booker T Washington

According to a recent study commissioned by Fidelity and undertaken by research boutique MYMAVINS, most Australians want to preserve some of their wealth and give it to the next generation. 

Almost 4 in 5 Australians aged 27 years or older believe sharing their wealth with the next generation is important. Over 3 in 5 feel a sense of responsibility towards managing their family's wealth for future generations.

Nest egg mentality

Almost 4 in 5 say they have a nest egg mentality; they avoid spending money to ensure they don’t run out.

This includes their super.  Almost 3 in 5 plan to leave behind their super savings to their loved ones after they pass away.
This places them at odds with the retirement income system and the purpose of super within it.  Australia’s three pillared retirement income system (super guarantee, personal savings and Social Security) is designed for super to be spent in retirement, not hoarded.

Free to choose

While 3 in 4 acknowledge that the that money in super is designed to be spent during their retirement, most also strongly believe that it’s their money to do what they want with.

Most Australians looking to leave a financial legacy are looking to do so with warm hands, preferring to give while they are still alive rather than after they are dead.  This can provide a well-timed leg up for their adult children when they could most do with the help, and of course they also get to experience the joy of giving.

But it complicates things because it raises questions about how much giving can be afforded and how to best organize the giving.

There’s also the push and pull of the right timing. It’s not just about who to give what, but also when. It can be tough to decide on the right time, as it may be too soon and could deprive the next generation of the joy from achievement.  There is also the impact of giving on the age pension to be considered. For example, someone who gives money before they turn 62 won’t be penalised under the gifting provisions by the time they become eligible for the age pension at 67.

Communication is key

Navigating family dynamics can be difficult. But with open communication, careful planning, and even professional mediation, any family friction can be avoided.

At When Financial Solutions, we are independent advisers who can help you balance your desire to help family with your need to preserve enough money for yourself so that you can grow old with dignity.  It’s not a matter of ‘if’ but ‘when’.

This article is general and does not consider your personal circumstances so it may not be appropriate to you.  If you would like advice specific to you, please let us know.