Over-50s Australians go solo in crafting financial legacies

The study, detailed in the research paper, titled, “Reimagining Legacy”, revealed that those over-50s are predominantly attempting to plan their financial legacies independently, with only 18 per cent seeking the expertise and support of financial advisers.

Coincidentally, the study also uncovered that a mere 14 per cent of Australians have a plan in place to leave a legacy, even though 67 per cent feel confident about doing so.

Moreover, it underscored a shift in financial priorities in Australia, with saving for a happy retirement and leaving a legacy now ranking higher than property ownership.

However, while aspirations for a “happy retirement” and leaving a lasting legacy for future generations take precedence over traditional financial goals like mortgage payment and property purchase, there are potential challenges. Notably, among the 67 per cent of confident Australians aiming for legacy attainment, 49 per cent are placing their reliance on wills, while 34 per cent are banking on superannuation for wealth transfer, raising concerns about whether they will achieve their objectives as intended.

Speaking at the launch of the research paper on Thursday, chief executive officer Grant Hackett revealed that a knowledge gap among those approaching retirement means they aren’t using investment solutions that could help fund the dignified retirement they deserve.

“We’re getting this massive shift of money, of Baby Boomers who are all heading into retirement and that’s about to peak in 2026 with 137,000 people turning 65 in that particular year. But all of that Baby Boomer wealth has obviously got to pass on to the next generation and really what a lot of our study really demonstrates is that people aren’t prepared to pass on that wealth,” Mr Hackett explained.

“They’ve [Aussies] accumulated this massive amount of wealth but what about how it gets handed over to the next generation? Is it tax effective? Will the beneficiaries be satisfied with what they’re getting?”

Interestingly, among those over the age of 50, 21 per cent anticipate that their superannuation will serve as the primary vehicle for transferring their legacy.

“We know people try to use superannuation as a vehicle for estate planning which is not what it has been built for,” Mr Hackett said.

“I think this is potentially an area where we could see more legislative change in super as that definition of super, that Chalmers, of course, spent a lot of time defining over the past 12 months, continues to refine what happens in superannuation and the way those funds are transferred.”

With Baby Boomers holding around $4.9 trillion in assets, there is a pressing need to help them optimise their wealth and effectively pass it on as a legacy to loved ones. Mr Hackett emphasised the role of financial advisers in this process.

“With the support of a financial adviser, you can build, protect, leave and preserve the legacy that’s right for you, whether you want to give your child a financial head start, bypass a generation, solve complex family structures, and alleviate the funeral burden on your family when you pass away,” he said.

Despite the significance of financial advisers, Generation Life’s research found that only 10 per cent of Australians currently use one, and 32 per cent believe they don’t need one, even though 77 per cent have specific wealth goals. This highlights the fact that millions of Australians are navigating complex wealth goals without the professional support they may need.

Also speaking at the launch, Finextra Wealth financial adviser Heath Hebenton explained that he initiates discussions about legacy planning right from the outset when engaging with his clients.

“It’s even part of our fact find document,” he said.

“We ask about how motivated they are to actually leave a legacy. It even drills down as far as leaving a charitable legacy.”

Mr Hebenton shared that approximately 50 per cent of NSW residents currently lack a valid estate plan, prompting his business to incorporate estate planning services in-house to address this gap.

Generation Life’s research also highlighted that while an estimated $224 billion in inheritance will be transferred between generations annually by 2050, a significant portion of this wealth transfer may be lost during the process. Namely, one in five (20 per cent) Australians over the age of 50 expressed worries about the potential impact of additional costs and legal fees on their ability to leave a legacy.