Are baby boomers to blame for growing financial inequality?
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Glenn Freeman is Morningstar's online editor.
The gathering backlash against Australia's baby boomer generation from less well-off Gen X and Gen Y cohorts is understandable but unwarranted, says Professor Deborah Ralston, new SMSF Association (SMSFA) board member and financial services academic.
"I think there's a bit of resentment there among the younger generations ... especially as people are finding it difficult to get into home ownership," Ralston says.
"The generation of baby boomers are the wealthiest generation for some time [and] ... have enjoyed a period of time with good working conditions, good salaries, and access to property. And whether the next generation will enjoy the same standard of living is debatable."
However, she emphasises that the benefits of this prosperity will also have an important flow-on effect to the children of that generation: "In an economy where you have no death duties [among other benefits] a lot of the wealth of the boomers will transfer down to the next generation as well."
Along with advisory roles with firms such as Mortgage Choice and the industry regulator, the Australian Securities and Investments Commission, Ralston has also conducted extensive studies into financial services--particularly super.
Much of this research was conducted in her role with the Australian Centre for Financial Studies (ACFS), and as leader of the CSIRO-Monash Super Cluster--a position she continues to hold. Ralston says she has a lot of interest in super, and is increasingly interested in post-retirement, and how people live during this period of their lives.
"Given SMSFs have over half their assets in the retirement phase, I don't think we've really turned our mind enough to policy in this area and the range of products that are available," Ralston says.
Living large or hunkering down
Despite the views some hold, of boomers' financial largesse via multi-million dollar property portfolios and high concessional super balances, studies conducted by the ACFS indicate the opposite.
"It's quite startling, there are lots of areas that are not as well catered for as they should be ... you can then find that people are nervous about whether their money is going to last," Ralston says.
"And then you see people underspending in retirement ... we see in our research, even people with quite decent balances are not spending as much as they should be to enjoy a good quality of life. Partly, that's people being quite cautious, and also people using it as a planning and bequest device."