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More Aussie parents are giving early inheritances to their kids to help them onto the property ladder. (Source: Getty) <\/p>\n More Aussie parents are giving early inheritances to their kids to help them onto the property ladder. (Source: Getty) <\/p>\n
A growing number of Aussie parents are giving their kids an early inheritance<\/a>, with many keen to help the younger generation into an ever-increasing property market<\/a> sooner rather than later. However it\u2019s sparked a warning for parents<\/a> to think twice about their generosity and not let it come at the expense of their own retirement.<\/p>\n An inheritance<\/a> used to be something you\u2019d leave your loved ones after you passed. But Perpetual Private senior financial adviser Elysse Lorenti said she\u2019s seeing an accelerating trend of Aussie parents bringing it forward<\/a> for their kids.<\/p>\n \u201cThey can see that they’re struggling. They can see that the conditions are much harder than it was for them when they were that age, and if they can afford to do it, they’re happy to do it,\u201d she told Yahoo Finance.<\/p>\n RELATED<\/p>\n Lorenti, who is based in Sydney, said she was seeing parents giving their kids early inheritances<\/a> of around $250,000 to $300,000 to help with a home deposit<\/a>.<\/p>\n But the desire for Aussie parents to help out their kids is also \u201ccompeting\u201d with the growing SKI trend, or Spending the Kids\u2019 Inheritance<\/a>. As the name suggests, it\u2019s where Aussies choose to spend their savings<\/a> on travel, hobbies and living life, rather than squirrelling cash away for the kids.<\/p>\n \u201cThere\u2019s definitely a bunch of people that think, nope, this is my money, my retirement, you\u2019ll get what you get when I pass away,\u201d Lorenti said.<\/p>\n Do you have a story to share? Contact tamika.seeto@yahooinc.com<\/a><\/p>\n There is a $5.4 trillion wealth transfer<\/a> that is set to take place over the next two decades as Baby Boomers pass property, super and investments to younger generations.<\/p>\n Australian Seniors research released in 2024 found nearly a third of Aussie parents aged over 50 had given financial assistance or an early inheritance to help their kids, including a home deposit, or help with a bond or paying rent.<\/p>\n While no parent wants to see their kids struggling, Lorenti said helping your kids into the property market<\/a> shouldn\u2019t come at your \u201cown detriment\u201d in retirement.<\/p>\n Homeowners aged 65 and over now need $77,375 annually for a comfortable retirement<\/a> as a couple, according to ASFA\u2019s latest budgets, and $54,840 for a single.<\/p>\n \u201cYou don\u2019t want to be sacrificing your own retirement, especially if you\u2019ve worked so hard throughout your life to build up a level of wealth to be able to retire and support yourself and enjoy yourself in retirement,\u201d Lorenti said.<\/p>\n \u201cYou’ve already sacrificed so much by raising the kids and doing all of that to educate them and set them up for their own lives.\u201d<\/p>\n Lorenti has found some parents will give their kids cash without thinking about the repercussions and can end up “overcommitting” themselves, feeling the impacts later in life. Others may be worried about what they can afford and end up delaying the decision altogether.<\/p>\n Lorenti said that\u2019s where getting advice could be useful to figure out your current situation, the cash flow you need now and through retirement<\/a>, and whether you can afford to give money to your kids and how much.<\/p>\n “It might be that you can afford to give to them, but maybe not the number you originally thought you wanted to give to them,” she said.<\/p>\n You also may be able to help out your kids in a different way if you can\u2019t afford to gift a lump sum.<\/p>\n \u201cYou can also do it as a loan, which means kind of you’re giving them money, but you expect them to pay it back,\u201d Lorenti said.<\/p>\n \u201cOr the other thing, if you can’t afford to actually hand over money, you can be a guarantor<\/a> for them. But there are risks that go along with that, and it’s important to get legal advice to make sure you’re well informed of those risks.\u201d<\/p>\n If you are receiving the age pension, you’ll also need to be aware of how an early inheritance could impact your payments<\/a>.<\/p>\n Get the latest Yahoo Finance news – follow us on Facebook<\/a>, LinkedIn<\/a> and Instagram<\/a>.<\/p>\n The financial advisor says it’s important for retirees not to overcommit. (Source: LinkedIn) <\/p>\n