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Date Published : Wednesday, July 30, 2008
Some baby boomers are seeing their retirement funds "soaked up" by the double-whammy of having to financially support both their parents and their children, a new report has found.
According to the research by Putnam, cited in the Daily Telegraph, many baby boomers had children later in life because they wanted to establish their careers and cost of living meant both partners had to work to pay the mortgage.
This means more parents are reaching retirement when their children are entering higher education. At the same time, their own parents are living longer and therefore need more physical or financial support.
This is eating into their retirement savings, which according to Bernard Salt of KPMG could be a bitter disappointment for baby boomers keen to maintain their consumer-driven lifestyles after they stop working.
"Most boomers anticipated that they would be caring for their elderly parents … The real surprise is that their children are still at home," he said.
According to Putnam's figures for the US, 20 per cent of baby boomers have a parent living with them - while approximately one third are still supporting children aged 25 or over. Some 23 per cent have children living with them, while eight per cent pay their kid's rent.
The company's head of retail in Australia, Peter Walsh, said these trends are being reflected here.
He added that the problem could get worse when these children come out of higher education with heavy debts, as they may delay saving for their own retirement or starting a family as a result.
"It's going to become a vicious circle," he said.
In 2005, federal government estimates from the Sydney Morning Herald said the amount fee-paying higher education students would have to borrow to fund their education would increase from $256 million in 2004-05 to $825 million in 2008-09.
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