AUSTRALIANS are the most generous in the world when it comes to inheritance, leaving more than half a million dollars to their children.
A study of global retirement trends shows that almost seventy per cent of Australians will bequeath assets to their heirs, outdoing comparable western countries like the UK, Canada and the US.
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After 22 years of economic growth, the average planned Australian inheritance is now four times higher than the global average of $US148,205 ($A166,728.54, £91,400), the HSBC Future of Retirement report shows.
“Over the past decade, Australian household wealth has grown 7.6 per cent per year, making us one of the richest nations per capita globally allowing retirees to provide their children with a significant financial legacy,” HSBC’s head of Wealth Management Graham Heunis said.
It showed that local retirees have allocated almost triple the amount of their US and Canadian counterparts and almost double the sum of those in the UK.
However, the survey did not identify the source of the wealth.
Australia’s high proportion of property ownership is thought to be a significant factor, alongside the substantial size of Australian superannuation funds.
In the UK and the US, heirs are subject to inheritance and estate tax of more than 40 per cent.
Mr Heunis said this meant retirees were more inclined to give financial gifts throughout their life to pay for major events like children’s education, mortgage or marriage rather than a lump sum endowment.
“With no inheritance tax in Australia, it’s no surprise the value and proportion of inheritance among Australian retirees is exponentially higher than the rest of the world,” he said.
The report shows that complacency by working age Australians about their retirement may partly stem from their reliance on inheritance to fund their non-working later years.
“This perception overlooks the fact that inheritance is often split between family members or may be eroded by children needing to pay their parents’ debts such as mortgages, medical or aged care needs,” he said.
The report, which was based on an online survey of 16,000 people in 15 countries, showed that those in the workforce needed to save for their own retirement and treat any inheritance as a bonus.