Something fishy: KIPPERS impact retirement savings
‘KIPPERS’ – Kids in Parents’ Pockets Eroding Retirement Savings – foreshadow a vulnerable retirement for the parents involved...
While some parents may say having their kids at home keeps them young, the reality is, the longer they stay, the more serious the financial implications for both generations.
Modern snapshot
With an aging population, we are working and living further
into retirement years than our parents and grandparents.
Furthermore, not all Australians have had the benefit of
compulsory superannuation all their working lives. As the
compulsory super system was only introduced in 1992, boosting
retirement savings to go the distance is more important
than ever before.
Saving for retirement is hard enough, without adult children staying longer at home.
High housing and tertiary education costs are justification for many older offspring still living at home. But also gone are the days of settling down early. Backpacking, travel, and charity missions are popular with the under 30s set, delaying inevitable financial planning.
Impact on retirement savings
‘Kippers’ cut their own costs by living at home,
but their advantage turns into expense for parents who inevitably
save less for retirement when they are trying to manage
a household and simultaneously absorb the expenses of ‘wayward’
guests.
The problem may lie with the generosity of parents. According to research by Neilsen Media, up to 50% of Australian households neglect to charge their children rent, and more than half of those who do, charge less than $100 per week.
Many parents might not realise how their future retirement could shape up as a result of supporting their adult children. Key decisions such as contributing extra funds into super or downsizing the family home may be delayed or in fact forgotten.
Do you know how much you’ll
need for retirement?
Table 1 highlights the asset levels needed for retirement.
If you are now supporting KIPPERS, are you on track? Do
you have enough savings to go the distance well into your
senior years?
Table 1
| Desired annual retirement income* | Capital required if earning 6% pa | Capital
required if earning 8% pa |
| $60,000 | $964,639 | $808,144 |
| $50,000 | $803,866 | $673,456 |
| $40,000 | $643,093 | $538,762 |
| $30,000 | $482,320 | $404,072 |
| $20,000 | $321,546 | $269,381 |
| *For a female retiring at age 65 who will live for 22 years post retirement | ||
The first steps toward leaving
the nest
Telling your kids that they are a financial burden may be
more difficult than just paying up. However, the sooner
they leave, the sooner you can get your retirement on track.
Everyone benefits – let your kids take their first
steps toward financial independence, while you take steps
toward a more secure retirement.
 Next: Chairman's Report |
As at
16 November, 2006 Doc Owner: < > |
