In the next 20 years it is expected nearly A$70 billion of inter-generational wealth will change hands.
In the next 20 years it is expected nearly A$70 billion of inter-generational wealth will change hands. And at the same time many of the baby boomer recipients will be retiring.
Right now the average superannuation balances for a baby boomer aged between 55 and 64 years is just A$183,000. Yet many professionals agree you need A$520,000 to generate an annual income between 60 to 70% of your former pay which will allow you to live comfortably in retirement.
While many elderly parents may not hold a lot of disposable income or investments, the majority (as high as 89%) do own their homes. And, in many cases their baby boomer children will inherit a part share in the family home.
According to Grant Salmon, Aviva's chief operating officer, receiving an inheritance can be quite daunting for someone who wasn't prepared for the additional money or property they suddenly have, particularly when grieving a departed parent.
"If you receive an inheritance it is important to carefully consider how the additional money is going to be used in the long term. Squandering large amounts of funds immediately isn't going to be of any benefit in the long run," cautions Grant.
"There are still many people on the brink of retirement without enough superannuation. Perhaps an inheritance from their parents is the difference between a very basic retirement lifestyle and the one they really want - but the money has to be put to good use now.
Inheriting money or property isn't always easy - there are decisions to be made, do you sell the property straight away to use the money to buy stocks or do you move funds straight into superannuation?
"It's important to have objectives about what to do with an inheritance and a very clear view of your future needs - importantly don't do anything before you receive some professional advice," says Grant.
There are many issues to consider when dealing with deceased estates so advice is very important. A financial adviser can help you structure a financial plan which takes into account all your needs, be they current or future. In addition, they should also be able to assist you with finalising your parents financial and taxation affairs.
-ends-
For further information please contact:
Simon Morgan
Group General Manager Public Affairs
Phone: (03) 9829 8892
Mobile: 0407 966 632
Notes to editors:
- Globally, Aviva Australia is part of Aviva plc, the world's fifth largest insurance group, the largest insurer in the UK and one of the top five life companies in Europe. Aviva was formed in May 2000 through the global merger of CGU plc and Norwich Union plc.
- Aviva is a leading provider of life and pensions products to Europe and has substantial businesses elsewhere around the world. Its main activities are long-term savings, fund management and general insurance. It has premium income and investment sales from continuing operations of A$78 billion, and more than A$624 billion of assets under management (as at 1 July 2004). The group has more than 56,000 employees and 30 million customers worldwide. Aviva is a leading provider of life and pensions products to Europe and has substantial businesses elsewhere around the world. Its main activities are long-term savings, fund management and general insurance. It has premium income and investment sales from continuing operations of A$78 billion, and more than A$624 billion of assets under management (as at 1 July 2004). The group has more than 56,000 employees and 30 million customers worldwide.
- The information in this document reflects Norwich Union Life Australia Limited's (NULAL) and NULIS Nominees (Australia) Limited's ('NULIS') understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information given in this document is of a general nature and has not taken into account the investment objectives, financial situation or particular needs of any particular person and it is not a substitute for professional advice. Applications to invest in a financial product issued by Aviva, or any of its related entities, must be made by completing the application form attached to the applicable Product Disclosure Statement ("PDS"). A PDS is available from Aviva or your financial adviser. Before making an investment decision on the basis of the information above, a prospective investor needs to consider, with or without the assistance of a professional adviser whether the information is appropriate in the light of their particular investment needs, objectives and financial circumstances.