Baby Boomer bankers
As Boomers hit their 70s, social researcher Mark McCrindle predicts we will witness the biggest intergenerational wealth transfer in history.
That’s because Boomers currently comprise 25 per cent of the population yet own 55 per cent of our nation’s private wealth.
Some are already feeling the pinch on retirement savings as relationship breakdowns take a toll on their families.
Five years ago, 70-year-old Annette was a self-employed empty nester and working long hours when out of left field her household more than doubled in size.
Welcoming back their middle child was a no-brainer for her and husband Clive, although some adjustments had to be made.
“My daughter was in an abusive relationship and she decided to leave,” Annette says. “It was a very quick thing. To make space for her and her two young children we had to get rid of furniture, and that was very hard for my husband.”
She admits they were more fortunate than most families in the same situation as they live in a multi-level house and were only using the lower space to store furniture.
“You just adjust because it’s your child and they’re going through a very traumatic time, and for the grandchildren you want to make it as easy as possible so they can emotionally adjust,” she says. “I never even thought about how it was affecting me.”
Neither did the couple consider how long their home would be a place of refuge; instead adopting an attitude of support that would end when they knew their daughter had found her financial feet.
A study of more than 1700 Australians commissioned by finder.com.au in 2015 found that 86 per cent of parents provide financial help to their adult children, with lending money and cash handouts the most popular ways they contributed financially.
McCrindle Research has crunched the numbers again, revealing housing unaffordability as one likely culprit that will continue to drive that assistance.
Two years ago a house in Brisbane cost about 27 times more than it did in 1975, while average full-time earnings have risen only ten-fold in the same period.
The outlook for our next generations in finding affordable housing becomes even more critical when these figures are combined with Government findings that reveal a disturbing trend in the labour market: one in 10 employees worked part-time four decades ago, now over a quarter of Australian workers work part-time.
Lorraine Pirihi, a Baby Boomer who mentors business owners over 50 through her website relaunchyourlife.com.au, challenges the notion that the majority of Boomers are travelling around Australia in a caravan spending their kids’ inheritance.
She says many Boomers have had failed business partnerships or made bad property investments and are struggling to find well-paid work that’s not on contract and for which they’re not overqualified.
“Bottom line they didn’t grow up with super. They don’t get huge payouts. I know for a fact many of the over 50s cannot find work,” Lorraine says.
She’s had clients whose children have come back home for various reasons, and attributes the high expectations of the younger generation, to parents who overcompensate because they weren’t around for their children when they were growing up, and parents who can’t say no when asked for a handout, for creating a Peter Pan generation.
Which makes her scathing of parents who are drip-feeding away the inheritance to their children because they haven’t set clear ground rules.
“In my own era I just went to work at 15 and I didn’t know what university was,” Lorraine says.
“Everyone wants their kids to have a better life, but giving them a better life doesn’t mean you physically throw stuff at them. They don’t learn from that.”
Lorraine helped her own children when they were younger. She kept her son on her health insurance while he was a student and helped her daughter out with a house deposit.
Her son paid his own personal bills, including the food he ate, when he lived at home, and when the equity in her daughter’s house grew, the loan was repaid.
“You can bankroll a little, but it has to be paid back. You get nothing for nothing,” she warns.
Late 60s retiree Lillian says she and husband Mike have given their three children, now in their early 40s, “measured” support over the years.
They did their share of babysitting when the grandchildren came along and have continued to give in other ways.
Three years ago they helped their youngest pay for her divorce.
“She was finding it very hard as she has one child and her ex-husband was an alcoholic who’d lost his job and had no money,” Lillian says.
When her daughter’s family home was sold the money was paid back and Lillian and Mike used some of it to take the family, including their five grandchildren, on a week-long holiday to the Gold Coast.
“Mike just wanted to, as he retired a few years ago with a good payout,” Lillian explains.
More recently they paid for a troublesome tree to be cut down for one of their other children as the neighbours were complaining.
“They normally don’t ask, we usually offer,” she says. “If they do ask for money, they will borrow and pay it back. They’re always very grateful for what we do. I suppose we just love and trust each other. I thank God every day for my kids.”
Self-employed, now retired Lena, 72, admits to dipping into her superannuation three years ago to the tune of $30,000 to landscape her daughters’ new home.
“I have been over-generous but I’ve done it because I haven’t got anybody else but my (two) girls, and they are important to me,” she says.
A considerable amount of asbestos contaminated soil had to be removed from the old garden and Lena knew her daughters wanted the landscaping done and wouldn’t dream of asking for help.
How her father treated her financially has in turn influenced how she has supported her own children.
Growing up, Lena and her two siblings didn’t go without. Her father, who she says was not generally known as a generous man, gave her £100 in shares when she was 12 and £1000 for her 21st birthday, which she used as a deposit on a house.
Previously a farmer, shares became her father’s business after he was bedridden with tuberculosis for four years. He passed that knowledge on to Lena who says she’s made quite a bit of money over the years playing the share market.
She gave both her daughters 10 per cent of the deposit on houses they bought in the early 1990s. Last year she took them all on holiday to Hawaii as a thank-you for a previous time when she’d been unable to help them out financially.
Asked if she has imbued a sense of financial responsibility and gratitude in her children despite her generosity, Lena says she has because each has studied hard at different times in difficult circumstances to further their careers.
“The girls call the garden ‘Mum’s garden’, which is lovely. They never refer to it as their garden,” she says.
When her household dynamics changed Annette confesses to erring on the side of generous, and only expected some kind of financial contribution when her daughter stabilised emotionally.
“We never kept records anyway,” she adds. “I think she realises her financial responsibilities and she’s gradually taken them on.
“It’s a gradual weaning process, so that when we know that she can go out and pay rent and support herself, that’s the point when we say go for it.”
One of the upsides of that support has been the deeper relationships that Annette says she has forged with her daughter and grandchildren that might otherwise not have happened as her ex son-in-law was controlling.
When children have returned and are living less harmoniously with their parents under one roof, Lorraine Pirihi says there are plenty of free professional resources available to help manage that situation.
“If you can fix it financially you’re doing well, but emotionally it’s a different story,” she says. “It’s about setting boundaries and learning to say no, because don’t forget, everyone’s an adult now, but you’re the parent.”