Are Gen X and Y outperforming baby boomers
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High interest savings accounts: Are Gen X and Y outperforming baby boomers?

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The traditionally high-spending younger generations may be overtaking their seniors when it comes to high interest savings accounts and saving money for the future. While baby boomer parents may be four times wealthier than their children, with average net worth of $1 million, they still hold considerable debts.

According to RaboDirect’s 2012 National Savings and Debt Barometer (NSDB), baby boomers born between 1946 and 1964 are entering retirement without a large surplus of savings. The survey found that 30 per cent expect to retire with a mortgage, with only half expecting their superannuation to be sufficient for their needs.

“It has been traditional in this country to expect to retire with the family home paid off and increasing in value. It’s been seen as the ultimate safety net and often used to help younger family members get their start in the property market as well as funding retirement lifestyles,” RaboDirect spokesperson Renee Amor said.

“Our survey findings directly contradict this expectation and are of real concern in an environment where housing values are slipping and our population is ageing.”

Median net baby boomer household wealth, excluding net equity in the family home, cars and superannuation, is just $22,000, ABS data shows. This indicates that younger generations may not receive the financial windfall from inheritance that they might have expected.

Gen X debt-burdened

The post-baby boomer Generation X born between 1965 and 1982 is also struggling with debt. According to Dun & Bradstreet, Gen X is carrying more personal debt than any other previous generation at a similar age.

Gen X are more likely to have home loans and other borrowings, with around two-thirds having credit cards, but often only make the minimum monthly repayments, according to survey company TNS Consultants.

The findings echo RaboDirect’s 2012 NSDB, which found half the working population had only one month’s savings or less in the bank.

Having children with educational and other expenses has added to the burden for Gen X. Unlike their parents, this generation paid university fees and graduated with less job security, along with suffering higher property prices.

Gen Y confident

Perhaps due to youthful enthusiasm, Generation Y are more confident, with the 2012 NSDB showing 64 per cent do not expect to need help from their parents in buying their first home.

According to‘s September 2012 Housing Affordability Sentiment Index, the generation born between 1983 and 2000 is the most optimistic about its current financial position, and also reported the most significant increase in its household savings.

With a fifth of Gen Y living at home, this generation has been able to accumulate savings and only 10 per cent have borrowed from their parents to buy a property.

Maximising savings

Fortunately, there are methods of maximising the value of savings that all generations can benefit from:

  • Look into high interest savings accounts, such as those offered by RaboDirect, and pay yourself first by having 10 per cent of your pay automatically transferred.
  • Using the benefit of compound interest and regular savings, ensure you have a minimum of three months’ income saved in case of emergencies.
  • Invest in a term deposit to reap safe and high returns.
  • Compare your service providers on an annual basis to make sure you are getting the best deals.
  • Be thrifty by walking instead of driving, buy fewer takeaway coffees and lunches, and borrow books, music and DVDs from the local library instead of buying them.

By maximising your savings through a high interest savings account, you can break free of the monetary shackles of your generation and be better placed to make future investments.

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