Life Begins At.....
Issue link: http://ebook.aprs.com.au/i/25630
FINANCIAL MATTERS Teach your children well onsidering today’s retirees had little benefit from Australia’s superannuation system for most of their working lives, many appear to have done pretty well financially. C Most retirees own their homes and have saved some funds to improve their retirement lifestyles. With their home a ‘Centrelink exempt’ asset, many are beneficiaries of Australia’s age pension. Perhaps many older citizens, be they parents or grandparents, had some experiences born from the Great Depression. Through hardship they learned to save, spend wisely and consciously or unconsciously, some have passed these traits to their children. The children of baby boomers may not do quite so well. Holidays abroad are valued highly by these offspring, often taking precedence over saving for a home deposit. Locking a little extra away for retirement can be rare. Some will retire with substantial mortgages and little savings. Most will worry about tomorrow when it comes. Unfortunately, life speeds up as we slow down! Your children or grandchildren aged in their twenties up to mid- thirties comprise a group commonly called Generation Y. From my own experiences as a parent and former teacher, I find a typical Gen Y to be outwardly confident and caring. They make time for experiences and relationships, yet value today more highly than tomorrow. They want to succeed financially without too much sacrifice and have no recollection of mass business failures, sharemarket crashes from the eighties or periods where real estate prices were not rising steadfastly. They tend not to be a generation that embrace ‘second-hand goods’ and even their flirtation with retro design trends says more about fashion and less about finance. Research from St George Bank suggests almost half of Generation Y expect financial assistance from parents or grandparents for one-off expenses or to pay for all or part of the cost of a wedding and 40 percent expect financial assistance for a house or deposit. A quarter of those surveyed said they have never had to budget or save funds. They want to be financially secure, but without pain. It is time for them to learn that this may come at the cost of their future financial security and it may be the valued retiree who has to provide this education. We love our offspring and want them to do well, but after a certain age, our support should probably be more emotional than financial. When these younger people seek financial support from parents and grandparents, ‘saying no’ may be one of the toughest but most valuable lessons in financial skills and survival that you can impart. Bank managers and accountants often speak of cases where financial assistance is sought from parents and grandparents to prop up businesses or advance career aspirations for these younger people. Take care, as such handouts can adversely impact the retirement lifestyle and Centrelink entitlements of the person gifting. Retirees and baby boomers may have to be tough to be kind when communicating lessons in financial responsibility. Zilla Lyons is a regional manager at the Australian Catholic Superannuation & Retirement Fund. She has worked at the fund for eight years and specialises in member education and engagement. Call ACSRF on 1300 658 776 or visit www.catholicsuper.com.au for more information on superannuation and retirement. Encourage your children and grandchildren to talk about their short and long-term financial goals and build pride in their achievements. Teach them that compounding is the secret to building wealth. The earlier they start saving the more they will build over time, whether this is towards a home deposit, reducing a mortgage or towards retirement. Super is a great vehicle for long-term savings as it is concessionally taxed. Furthermore, because it’s preserved, it can’t be cashed out before retirement. Salary sacrifice is popular because it is much easier to save prior to being paid. Encourage action not procrastination! Retirees are very generous with their time and often care for ageing parents as well as their own children and grandchildren. The road ahead is uncertain and sharing your financial wisdom and experiences with your offspring will be your valuable and enduring legacy and hopefully even more lasting than handouts. Disclaimer: This superannuation article is for general information only. It does not take into account your personal objectives, financial situation or needs. As a result, you should consider its appropriateness to your own situation and obtain independent financial advice before making any decisions about your superannuation. THE RETIREE AUTUMN 139