Navigating the complexities of retirement planning and intergenerational wealth transfer is increasingly important for Australian families. As the ‘Bank of Mum and Dad’ (BoMaD) plays a more prominent role in assisting younger generations, understanding the implications for both retirees and their heirs becomes essential.
Intergenerational wealth transition
Australia is on the cusp of its largest wealth transfer in history, with an estimated $3.5 trillion expected to pass from Baby Boomers to younger generations over the next two decades (Productivity Commission, 2021). However, studies suggest that without proper planning, a significant portion of this wealth may be lost by the second generation, and even more by the third. Implementing clear succession plans and fostering open family discussions about wealth management can help preserve and effectively transfer assets.
Managing superannuation for retirement and legacy
Superannuation is primarily designed to provide income in retirement, but it can also play a role in estate planning. Retirees can use strategies such as Account-Based Pensions to generate a steady income while managing their remaining super for future beneficiaries. Staying informed about legislative changes and considering strategies such as Binding Death Benefit Nominations (BDBNs) can help ensure assets are distributed according to one’s wishes.
Generational spending habits in retirement
Spending patterns in retirement vary notably across generations, influenced by differences in asset ownership and financial challenges. According to KPMG’s 2025 analysis, Generation X holds the highest average housing wealth at approximately $1.31 million, closely followed by Baby Boomers with $1.30 million. In contrast, Millennials and Generation Z have significantly lower average housing wealth, at $750,000 and $69,000 respectively, highlighting the substantial hurdles younger generations face in entering the property market.
The ‘Bank of Mum and Dad’ and gifting
The ‘Bank of Mum and Dad’ (BoMaD) has become a significant source of financial support for younger generations, particularly in helping them enter the housing market. Parents provide assistance through direct gifts, loans, parental guarantees on loans, and rent-free housing to help their children save for a home. Estimates of the BOMD lending vary widely ranging from $35 billion to $92 billion, but comprehensive national data on these arrangements remains limited (Productivity Commission, 2021).
While many parents are eager to assist their children, it’s important to consider the long-term impact on their own financial security. Balancing family support with retirement needs requires careful planning, clear agreements, and an understanding of how gifting or lending money could affect Age Pension eligibility and future lifestyle choices.
Balancing financial security and family support
Balancing personal financial security with the desire to support family requires careful planning and open communication. As Australia experiences this significant wealth transfer, proactive strategies in superannuation management, spending habits, and family assistance can help ensure a stable financial future for both retirees and their heirs.
Ensuring your retirement is secure while supporting loved ones requires careful planning. A specialist retirement adviser can help you navigate superannuation, estate planning, and gifting strategies to achieve the right balance. Why not book a Retirement Advice Consultation today to help you navigate the complexities, and take the next step in securing your financial legacy with full confidence.
What about you?
Have you discussed your inheritance plans or financial support with your family? What challenges have you faced in these conversations?
How do you balance helping your children financially while ensuring your own retirement security?
Please could you clarify nomination of beneficiaries in super accounts. I was advised when making a will to remove my adult childrens names and replace with 100% to go to my estate as otherwise the amount paid out to the children would be taxed.
Hi Gael, Thankyou for your question. When thinking through estate planning and nominating your beneficiaries, I would recommend financial advice. The right answer for you will depend on your circumstances. You can book a strategy consult with one of our qualified advisers here.
Superannuation death benefits have different tax outcomes depending on whether the beneficiary is a tax dependent:
– Tax dependents (spouse, children under 18, financially dependent, or interdependent) receive both lump sums and pensions tax-free.
– Non-tax dependents pay tax (15% plus Medicare levy) on the taxable component of lump sums, while the tax-free component remains untaxed. They cannot receive death benefits as a pension.
You might find this article helpful, as it discusses making binding death benefit nominations.