The Generational Squeeze: A Challenge for Australian Millennials
Millions of Millennials in Australia are facing the financial strain of supporting both their children and elderly parents, a situation commonly referred to as the “generational squeeze.” This predicament is particularly pronounced for Peter Ng, a 40-year-old e-commerce worker from Melbourne. Ng, along with his siblings, has been financially supporting their parents, Angel and KK, who are 68 and 70 respectively, since their retirement.
Ng mentions that his family collaborates to cover various expenses such as medical bills, groceries, and general living costs. He currently contributes a few hundred dollars monthly, noting that while his parents receive the age pension, it often falls short of their needs. This financial support is expected to grow as his parents age and their health may decline.
In many Asian cultures, including Ng’s, there’s a strong tradition of adult children taking care of their parents. He likens this to a joke made by comedian Ronny Chieng, emphasising that expressing love often translates into financial support. Ng observes that this cultural expectation contributes to the additional pressure on financial resources, especially when many of his friends also find themselves in similar situations.
Ng’s responsibilities are compounded by the need to provide for his two young boys, Daniel (11) and Nathen (9). Balancing the costs associated with nurturing children, extracurricular activities, and school-related expenses, he finds it essential to manage the family budget wisely. Ng expressed the necessity of limiting dining out and being cautious about major purchases, as they strive to keep an eye on their financial future.
Despite the challenges, Ng feels fortunate to have supportive siblings who share the responsibilities, alleviating some of the pressure. He acknowledges that handling this burden alone would be daunting.
Recent research from the financial advisory firm Findex highlights that many Australians are on the brink of experiencing or are already facing the generational squeeze, with Millennials being notably vulnerable. Their study indicates that half of the surveyed Millennials anticipate having to support extended family members during retirement. A significant number predict they will financially aid elderly parents while simultaneously caring for their children.
Findex’s co-CEO, Matt Games, remarked on the dual challenge faced by Millennials. He pointed out that housing affordability issues for their children and longer life expectancies for parents are creating a “double whammy.” With health complications on the rise and the financial support expectations growing, planning for retirement becomes increasingly complex.
The ASFA Retirement Standard suggests that couples require approximately $73,011 per year and singles about $51,805 to live comfortably in retirement, without accounting for additional dependents. Games encourages families to engage in open discussions to effectively navigate the complexities of the generational squeeze, indicating that proactive planning today can mitigate future financial stress.
Both Games and Ng agree on the importance of financial planning for retirement. Ng and his wife have been contemplating ways to generate passive income, potentially through investment properties or other avenues. Ng hopes to seek professional financial advice to ensure they are prepared for the future and to establish a solid plan for supporting both their children and parents.
Looking ahead, Ng hopes to retire in his mid to late 60s. He remains optimistic as his parents and in-laws are currently healthy, providing them with time to devise a thoughtful plan for their financial future.
As financial pressures mount, Millennials in Australia must be aware of the generational squeeze and take proactive steps toward financial planning, ensuring they can balance their obligations while securing their own retirement aspirations.
