Pre-retirees the ‘sandwich generation’
Working Australians aged 50 or over, or the Baby Boomers, are the “sandwich generation” who are caught between two generations that both need their financial support, according to REST Industry Super.
A whitepaper commissioned by the super fund, titled ‘The Journey Begins’, highlighted the intergenerational dependency prevalent in many Australian families, with figures showing older workers were providing nearly $200 billion over their collective lifetimes.
Children aged over 35 and retirees were providing another $310.2 billion, with the amount of intergenerational dependency totalling $507 billion over the combined lifetimes of Australians aged 35 and above.
REST chief executive, Damian Hill said this level of intergenerational dependency and the level of debt with which a near majority of older working Australians were retiring could interfere with high standards of living in retirement, especially when funds were being diverted to adult children.
“As the majority of assets for older working Australians are locked up in the family home, carrying mortgage debt into retirement can be a cause of financial stress for retirees,” Hill said.
“While any debt they have is usually offset by savings in superannuation and other investments, it’s a good idea for people in this age bracket to try as much as possible to pay down this debt before retiring.”
Older workers were providing $107.6 billion in intergenerational help for everyday expenses and education, or Tier 1 expenses, retirees $80.7 billion and younger Australians $63.6 billion to cover these two areas.
Everyday expenses and medical and health expenses, which could be substantial and urgent, were more likely to have come from children (14 per cent). These children would have had to make some financial sacrifices (38 per cent of those who helped with medical or health expenses) or have had to fund it with their income as opposed to savings (38 per cent of those who helped with everyday savings).
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