Australia and countless other countries across the world are on the brink of the most substantial intergenerational wealth transfer ever recorded. Dubbed by many as the ‘great wealth transfer,’ we are expecting to see a staggering US$68 trillion (around A$100.2 trillion) changing hands worldwide within the next two to three decades. A 2021 Productivity Commission report estimated that around $3.5 trillion in assets will be transferred in Australia alone by 2050.
Originating mainly from the baby boomer generation, this shift is remarkable not only for its sheer scale but also for its potential implications on both the economy and society.
What’s more, according to a new report by JB Were, women will be the overwhelming winners from the intergenerational wealth transfer, receiving 65% of the assets due to pass from Baby Boomers and their parents to the next generation.
The concerning aspect of this phenomenon, however, is that Australians – both young and old, men and women – are ill-prepared for what is set to be the largest wealth transfer in history.
And it could cost them.
In this article, Tracy Wan from Aspire2 Wealth Advisers explores what women, in particular, need to know about intergenerational wealth transfer in Australia.
Why are Women Set to Benefit Most From the Great Wealth Transfer?
With all this in mind, what else is causing industry experts to estimate that the coming influx of intergenerational wealth transfers will benefit women in Australia more?
The shift is attributed to three main factors:
Women Living Longer
Forecasts suggest that women are likely to manage family finances for at least twenty years following inheritance, primarily due to their longer life expectancy compared to their partners. In the demographic of individuals aged over 70, the female population exceeds the male by 16%, a gap that expands to 33% in the over-80 age bracket.
Women Gaining Assets Through Divorce
A substantial portion of existing wealth is being reallocated due to divorces and separations. In 2023, Australia saw over 50,000 divorces, with a notable increase among couples aged 50 and above. Research by the Australian Institute of Family Studies (AIFS) indicates that separation rates among those married for 20 years or more have increased fivefold in recent decades, with this group often found in the high-net-worth (HNW) category.
On average, around 10,000 HNW couples are dividing their assets annually, leading to an estimated $30 billion asset pool – approximately $15 billion becoming controlled by women each year.
Women Assuming Responsibility for Family Finances
Studies indicate a widespread trend of the eldest daughter in the family often assuming the role of the person managing the family estate, being 50% more likely than other members.
Such responsibility for overseeing a significant amount of assets is expected to drive the need for services from family offices, financial advisers, and accountants. As women must navigate the complexities of intergenerational wealth transfer in Australia, they will face challenges in planning, managing inheritors, and addressing legal and tax obligations, thereby increasing the demand for professional guidance and support.
Shifts in Female Finance & Working Norms
The population of high-net-worth women in Australia is consistently increasing, with huge growth over the last ten years. CoreData’s research suggests that the growth rate of new female millionaires is nearly double that of their male counterparts (5.7% per year).
In addition to the reasons outlined above, female participation in STEM-related higher education courses is increasing, leading to a higher presence of women in technology-centric careers. Fields like information media, telecommunications, and professional, scientific, and technical services are providing women with opportunities for higher earnings. Coupled with a steady rise in women assuming leadership roles, this trend is expected to boost the number of high-net-worth women in Australia in the coming years.
A greater number of women are also showing a strong inclination towards entrepreneurship. In fact, the rate of growth in female entrepreneurs is three times that of males, with women now owning a third of Australia’s small businesses. Such a surge is significantly influencing financial decision-making in the business realm and in personal wealth management.
A persistent gap still remains, however, that requires urgent attention: financial literacy.
A Greater Need For Improving Women’s Financial Literacy
Statistically, women continue to lag behind in financial knowledge and confidence, posing significant economic empowerment and security challenges. This lack of knowledge becomes particularly concerning given that women often live longer than men, earn less on average, and are more likely to take career breaks for caregiving responsibilities.
Addressing women’s lack of financial knowledge requires a multifaceted approach involving education, empowerment, and advocacy. There is a need for targeted financial education programs tailored to women’s needs and life stages. These programs should cover essential topics such as budgeting, saving, investing, retirement planning, and managing debt.
Fostering a culture of financial empowerment and confidence is essential in encouraging women to take charge of their financial futures. This involves challenging stereotypes, promoting positive role models, and providing mentorship and support networks where women can share knowledge, experiences, and resources. By fostering a sense of agency and autonomy over their finances, women can make informed decisions that align with their goals and values, ultimately contributing to their long-term financial well-being and economic empowerment.
Improve Your Financial Literacy & Prepare for Generational Wealth Transfer with Aspire2 Wealth Advisers
As we stand at the threshold of a significant shift in wealth, we cannot overstate the importance of being financially informed and prepared. With women increasingly at the forefront of this intergenerational wealth transfer in Australia, comprehensive financial literacy and astute wealth management may help place millions of people in better stead for years to come.
Whether you’re navigating the complexities of inheritance, exploring entrepreneurship, or looking to optimise your financial future, Aspire2 Wealth Advisers is here to guide you. Our team of experts is dedicated to empowering you with the knowledge, tools, and confidence needed to make the most of these transformative times.
Learn more by reading our guide on Personal Finance for Women: What Women Need to Know When It Comes to Inheritance.
Alternatively, you can contact our experts directly today to embark on a journey towards your financial freedom.
This content contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser (Aspire2 Wealth Advisers, 08 9322 7028), and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Please contact us if you want more information.
