Not Tomorrow's Problem Guide 2024 Media Release

As the Australian dream moves further out of reach for younger generations, new research reveals that four in five parents are aiming to shoulder the burden

Four in five parents are preparing to prop their children up financially for the purchase of their first home, new research from Generation Life, the leading provider of tax-effective investment bonds and lifetime annuity solutions, has revealed.

These findings come as a response to inflation and the cost of living, which three in five think will impact their financial goals, and the introduction of new financial policies, such as the stage three tax cuts and the proposed new division 296 super tax, which seven in ten unadvised Australians lack an understanding of.

These policy changes may further delay the retirement of the 3.6 million baby boomer Australians expected to leave the workforce in the next decade.ᵃ This may be due to 84% lack understanding about how superannuation concession changes may impact them.

Financial advice is no longer a nice to have, but a must have, as about three-fifths of advised Australians have a good understanding of financial policy changes (72% understand the proposed superannuation concession changes and 70% understand the stage 3 tax cuts), and 68% of Australians with an adviser claim they are happier with their financial situation, despite a difficult economic environment.

Grant Hackett OAM, CEO of Generation Life said about the research findings: “We’re at a turning point where, because of the unstable economic landscape and the significant policy changes, the strategies that worked yesterday aren’t going to work tomorrow. Financial planning can’t be a ‘set and forget’ exercise.

“Stage three tax cut related bracket creep has been reported as likely to impact around a million young professional Australians over the next six years or so.ᵇ They may be working their way up the corporate ladder, building their investment portfolios and working towards financial goals, and considering the impact of moving through various tax brackets will be an important part of this. It’s key that these individuals are aware of this impact and are structuring their finances right, today, to reflect what they could be doing in the next five or ten years.”

“We also know, proposed superannuation concession changes are expected to affect around 80,000 Australians with a balance of over $3 million.ᶜ Many of these people have been making non-concessional contributions to their super and are now finding themselves in a position where they’re looking at paying a disproportionate amount of tax. Therefore, it’s important they find a more tax-effective solution.”

“This is why financial advisors are so important: to help educate Australians and empower them to build a holistic plan, and adopt flexible structures that importantly provide them with confidence and are considered stable, but also flexible to evolve to reflect the changes that are happening.”

The Not Tomorrow’s Problem report surveyed four cohorts at different life stages to understand their financial goals and challenges in today’s complex landscape. This included aspiring Australians, mid-life high net-worth individuals with children, pre-retirees, and legacy builders.

Other key findings from the research include:

• Seven in ten Aspiring Australians have low awareness of proposed changes to superannuation concessions and stage 3 tax cuts as well as issues like bracket creep. This could potentially put them at risk of financial setbacks given the impact these changes may likely have on their lives.

• Currently only one in four (26%) pre-retirees feel able to achieve their top goal of saving for a happy retirement.

• 63% of Legacy Builders are focused on estate planning, alongside helping loved ones achieve goals in the shorter term, including that 53% aim to help their children buy their first home.

• Across all cohorts, saving for a happy retirement ranked in the top four financial goals.

Generation Life’s tax-optimised, new generation of investment bonds and lifetime annuity products have been created to cater to different financial goals, with a solution for Australians at every life stage.

Find out more about the research findings and Generation Life’s innovative solutions by downloading your copy of the Not Tomorrow’s Problem Guide here.

Footnotes:

[a] Hannah Wootton, (2024) Boomer ‘wave’ of outflows starts to hit super. Available at: https://www.afr.com/policy/tax-and-super/boomer-wave-of-outflows-starts-to-hit-super-20240527-p5jgxl, accessed 27 August 2024.

[b] Kehoe, J. and Read, M. (2022) One Million Australians face top tax rate by 2030, Australian Financial Review. Available at: https://www.afr.com/politics/one-million-australians-face-top-tax-rate-by-2030-20221005-p5bnao, accessed 27 August 2024.

[c] Explanatory Memorandum Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023

Research methodology

An online survey in June 2024 was co-designed by Generation Life, Sefiani, and CoreData, with fieldwork managed by CoreData. Respondents were sourced through CoreData’s proprietary panel and through research panel partners. CoreData processed the data for the results to be accurate, consistent and reliable, reducing the risk of error and bias in the analysis and for insights to be robust.

1,021 total respondents participated in the survey, with an average survey length of twelve minutes. This included:

•  n=308 Aspiring Aussies, defined as under 35-year olds with an income of $80,000 to $190,000 per annum

•  n=204 Mid-life High-Net-Worth-Individuals with children, defined as those 50-years-old and under with an investment portfolio of at least $1,000,000 and at least one child under the age of 21

• n=276 Pre-Retirees, defined as those over-50 who are not retired and have an income of $80,000 to $190,000 per annum, and,

• n=233 High-Net-Worth Legacy Builders, defined as those over 50 who have an investment portfolio of at least $1,000,00