On average, Australians enjoy the highest inheritance payouts worldwide at roughly half a million dollars per person, HSBC has found, but on the flip side they are also getting complacent over saving for retirement.
According to HSBC's global Future of Retirement report, Australians pass on an average inheritance of 561,636 Australian dollars ($501,919) to their heirs, which is four times higher than the global average of $148,205. Some 69 percent of Australians, the second highest ranking of the 15 countries analyzed, were planning to leave an inheritance.
But Graham Heunis, head of retail banking and wealth management at HSBC in Australia, said the country's hefty inheritance levels were discouraging the younger generation from worrying over their retirement. Half of working Australians told HSBC their future inheritance would partially finance their own retirement, while 14 percent would rely solely on it.
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"This latest report shows that this complacency [over savings] may partly stem from Australians banking on their inheritance to fund their retirement," said Heunis. "But 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."
Inheritance levels have soared in recent decades due to the strength of the Australian economy and the absence of inheritance tax, according to HSBC.
"Over the past decade Australian household wealth has grown 7.6 percent per year making us one of the richest nations per capita globally, allowing retirees to provide their children a significant financial legacy," said Heunis.
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"However, 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 added.
The report contrasted Australia with other affluent western nations like the U.K. and the U.S., where inheritance and estate tax may cost heirs upwards of 40 percent of an inheritance.
In these countries, retirees are inclined to give financial gifts throughout their lives to pay for their children's major life events like education, mortgage or marriage rather than a lump sum endowment, said the report.
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