Why millions of Aussies are worried about rising interest rates – even though they don’t have a mortgage
- Most baby boomers worried about recession
- They are scared about lower super savings
Baby boomers are very worried about rising interest rates leading to a recession, even though most of them have paid off their home.
Older Australians often remind the young about how they endured 17.5 per cent interest rates in 1990.
While most of them have paid off their homes by now, an Australian Seniors survey of 5,000 Australians aged 50 and over showed 84 per cent of women in this age group, and 75 per cent of men, were worried about a recession depleting their super.
Overall, 79 per cent of respondents were worried about a recession affecting their retirement savings, with 32 per cent having a strong concern.
Baby boomers are very worried about rising interest rates leading to a recession, even though most of them have paid off their home (pictured is a stock image)
SuperRatings executive director Kirby Rappell said more interest rate rises were likely to make 2023 a volatile year for superannuation.
‘Inflation remains high and the Reserve Bank’s commitment to controlling inflation means member balances are likely to see more ups and downs over the coming months,’ he said.
The baby boomer generation, born from 1946 to 1965, would cover most of the over 50s age bracket, with a smaller number comprising the older Generation X crowd.
When Australia last endured an interest rate rise-induced recession in 1991, baby boomers were aged 26 to 45, and paying off a mortgage.
As retirees, they are now more concerned about the rising cost of living with inflation at a 32-year high of 7.8 per cent.
Almost three-quarters, or 73 per cent, said they would cut back on everyday expenses.
One in five, or 18 per cent, said they would either postpone retirement or pick up extra work.
The Australian Bureau of Statistics, however, said younger and middle-aged workers were having a harder time dealing with high inflation.
Almost three-quarters, or 73 per cent, said they would cut back on everyday expenses (pictured is a Woolworths in Sydney’s eastern suburbs)
The cost of living for employees last year surged by 9.3 per cent, due mainly to a 26.6 per cent increase in mortgage interest repayments, as aged pensioners saw their everyday expenses climb by 7.3 per cent compared with 7.6 per cent for self-funded retirees.
Australia’s median, growth-orientated superannuation balance last year shrunk by 4.8 per cent, marking the worst year since the Global Financial Crisis in 2008 when retirement savings plunged by 19.7 per cent, SuperRatings data showed.
This coincided with the Reserve Bank of Australia raising rates eight times, before February’s latest hike took the cash rate to a 10-year high of 3.35 per cent.
The Commonwealth Bank, Westpac and ANZ are expecting to more rate rises by May that would take the cash rate to 3.85 per cent.
AMP Capital chief economist Shane Oliver said a 4.1 per cent cash rate would be very likely to spark a recession.
The cost of living for employees last year surged by 9.3 per cent, due mainly to a 26.6 per cent increase in mortgage interest repayments, as aged pensioners saw their everyday expenses climb by 7.3 per cent compared with 7.6 per cent for self-funded retirees
