Advice ‘invaluable’ to balancing legacy wants with retirement needs

As retirees navigate their financial needs and mounting inheritance expectations from family, Colonial First State (CFS) has said financial advice has an important role to play in balancing these competing priorities.

Based on a survey of 2,250 Australians, CFS research found many young people may be overestimating their future inheritance with around half of 18- to 29-year-olds expecting a windfall from older generations, with the average anticipated amount exceeding $525,000, nearly double that expected by those aged 50–64.

Research from Fidelity earlier this year also suggested Australians are hoping for a large inheritance, with two in five individuals aged under 59 expecting to receive a windfall in the future, and half believing it will be greater than $200,000 which they plan on using to pay off debts, buy a home, or support family.

However, as the average life expectancy increases – sitting at an average of around 83 years according to the World Health Organisation (WHO) in 2021 – more assets are being earmarked for retirement expenses instead.

Notably, CFS found that just 38 per cent of Australians have a will, despite most planning on leaving an inheritance, which could lead to challenges when splitting assets down the line.

Among those that do have a will, the family home, vehicles, and any remaining superannuation are top of the list to be passed down, meanwhile investment portfolios and other properties are largely set aside for retirement income.

Craig Day, CFS head of technical services, said: “With longevity increasing, many people may need to start prioritising financial security over inheritance planning.

“Young people may be overestimating the size and certainty of future inheritances. As their parents enter retirement, the focus could be shifting from wealth transfer to sustaining a modest, debt-free lifestyle.”

Adding to this, CFS Superannuation chief executive Kelly Power said this heightened expectation among young people is largely driven by mounting financial pressures, including the rising cost of living, stagnant wage growth, and the cost of housing.

“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. It's a delicate balance that requires careful planning and open communication.”

Power suggested that families should engage in open discussions across generations, adding that financial advisers can be “hugely valuable for families as they navigate the unique financial challenges of different life stages”.

Day added: “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 not just about passing on wealth – it’s about passing on clarity. Families need to talk about their intentions, their needs, and their plans. That’s where advice becomes invaluable.”

However, Adviser Ratings’ 2025 Australian Financial Advice Landscape report suggested the next generations’ inheritance expectations may be valid as 41 per cent of clients surveyed said they would be transferring $500,000 or more to the next generation, up from 31 per cent in 2024.

As clients look to navigate the complexities of wealth transfer, tax minimisation came through as the primary concern (57 per cent), while wealth preservation across generations (49 per cent) and timing considerations (49 per cent) were also key priorities for clients.

Familial relationship factors were also raised top priorities during wealth transfers, including ensuring equitable distribution strategies (45 per cent) and assisting in family conflict resolution (30 per cent).