A whopping 86 percent of Australia’s 5.5 million baby boomers are, in varying degrees, financially under-prepared for retirement, according to recent research, reports MacroBusiness.com.
The white paper – based on the attitudes of 1,200 Australians approaching retirement – reveals a massive disconnect between what baby boomers expect their retirement to be like, and what reality has in store.
The survey also reveals a growing reliance on the family home to help close the retirement savings gap, with almost half planning to move house once retired, and more than a quarter expecting to downsize.
Equally surprising is the proportion of unretired over 50s – over a third – identified in the survey as now having (intergenerational) financial dependents.
“So they’re not only funding their own retirement, they’re also entering retirement with debt and/or funding dependents later in life, be it adult kids or elderly parents, ” said a spokesperson.
The white paper reveals that only 14 percent of baby boomers feel financially prepared for retirement, 51 percent say they are somewhat prepared financially, while a further 35 percent described themselves’ as completely unprepared.
The retirement of the baby boomer generation – defined by the Australian Bureau of Statistics (ABS) as those born between 1946 and 1965 and comprising around 25% of Australia’s population – is expected to have a significant bearing on the performance of the Australian economy and asset markets, particularly housing, over the coming decades.
Over the past 40 years, Australia enjoyed a demographic dividend from the large baby boomer cohort entering the workforce. This process generated a population structure optimal for economic growth, whereby the largest segments of Australia’s population were neither young nor old, but in the middle (i.e. working age).
This demographic dividend is illustrated in the next chart, which plots the ratio of the working age population- defined as those aged between 20 and 65 years old – to the non-working age population – defined as those aged under 20 years old and over 65 years old.