At a time when Baby Boomers are suffering a sharemarket hammering and a decimaction of their retirement funds, many are under pressure to use their hard-earned savings to help pay for their children’s houses.
According to a survey last year by RaboDirect Bank One in three Gen Yers claim they can’t afford to buy a home without a family handout, new research reveals.
The survey found that one in five Baby Boomers expect to help their adult-children buy their first home. I guess this means that many families are talking about the situation and Gen Y’s want to bring forward their inheritance.
Now there’s nothing wrong with this but RaboDirect general manager Greg McAweeney warns: “With the first Baby Boomers reaching 65 this year and many of them moving into retirement, there’s likely to be increasing pressure on parents to dip into their retirement savings to fund their ‘Kidults’ first home.”
“With the news of sharemarkets tumbling globally, Aussies are rightfully anxious about the stability of their superannuation.”
“Baby Boomers have enough to be worried about without added concerns about dipping into their super to help their kids buy their first home,” McAweeney added.
The bank’s National Savings and Debt Barometer also found that among those aged less than 40 who intend to take out a home loan in the next few years, half (51 per cent) are not currently living with a partner, suggesting they will take on the loan themselves.
At the same time, more than one third of Gen Y (35 per cent) said they can’t afford to buy a house without assistance from their parents.
The concern here is that making such a commitment in an unstable economic environment may drive each generation further into debt, said McAweeney
McAweeney urged Gen Y and their parents to talk about their finances and expectations honestly to avoid financial stress.
Having said that…there’s nothing new about property being expensive for first home buyers and there is nothing new about parents helping their kids get a foot on the property ladder. Almost 40 years ago I bout my first property in partnership with my parents. It’s the only way I could get started.
By the way…that property cost $18,000 and we got $12 a week rent and I was excicted!
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