Home / News / Older generations increasingly picking up the financial tab: Report

The Productivity Commission estimated $3.5 trillion will pass on to future generations over the next 25 years, with this report illustrating just how that’s playing out now in families across Australia.

Baby boomers and the silent generation – those born before 1946 – are increasingly being asked to step up to the mark to financially assist the younger generations.

This is one conclusion that can be drawn from the 2024 MLC Financial Freedom Report that highlights the increasingly important role that the finances of these two generations are playing in setting up younger people who are often struggling to make ends meet.

This assistance – a practical expression of the Productivity Commission report that estimated $3.5 trillion would change hands between the generations by 2050 – comes in various forms, including living at home, education fees and buying a first car.

The other interesting finding in the report was the positive impact this financial assistance had on the recipients. To quote the report, “more than two in five Australians (43 per cent) who have received substantial support from their families are extremely or very satisfied with their current financial situation, compared with fewer than two in 10 (17 per cent) who did not receive financial help.”

The most common form of support that Australians with offspring provide or plan to provide is allowing adult children to live at home for free or for board (40 per cent).

Other common forms of support include paying school and university fees (38 per cent), helping adult children to buy their first car (37 per cent) and paying for educational supplies or technology support (30 per cent).

The research, commissioned by MLC and conducted by the social research agency McCrindle, surveyed 2,507 Australians across diverse demographics.

The report also found grandparents are playing an increasingly prominent role in supporting younger generations.

“Half of Australian grandparents (52 per cent) are currently, or planning to, provide financial assistance to their grandchildren, ranging from one-off financial gifts (18 per cent) to regular financial support (16 per cent).

“Among the younger generations, six in 10 (60 per cent Gen Z and 56 per cent Gen Y) received financial support from their grandparents upon reaching adulthood. This compared with just two in 10 (20 per cent) for Gen X and less than one in 10 (six per cent) for baby boomers,” the report says.

MLC head of technical services Jenneke Mills says: “Developing good financial habits is key to building confidence in navigating life’s financial challenges. Family support, especially for younger generations, goes beyond providing short term relief – it fosters a foundation of financial security and confidence.

“By offering support, whether it be through financial education or practical assistance, parents and grandparents are helping to shape how young Australians approach their financial futures.”

How critical this financial support from the older generations is for younger Australians is borne out by the fact that the research found that while 70 per cent say financial wellbeing is the key to achieving life’s aspirations, only 23 per cent are satisfied with their current position and only 31 per cent feel equipped to make effective financial choices.

Mills says Australians view financial wellbeing as the ability to meet their financial needs, live free from financial stress or worries and have the financial freedom to make independent choices.

“While they have big dreams, the report reveals many lack the confidence to achieve them. The research highlights that in today’s world, developing good financial habits, underpinned by family support, is key to building confidence and achieving those dreams.” Little wonder the older generations have such an important financial role to play – again and again.