Millennials face 'generational squeeze' as most vulnerable group in retirement

By Newsdesk

May 19 2025
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Millennials will be the most vulnerable demographic to face the "generational squeeze" in retirement, caught between supporting elderly parents and adult children while funding their own later years, new research has found.

Millennials face 'generational squeeze' as most vulnerable group in retirement

The study by financial advisory firm Findex revealed 51 per cent of millennials believe they will need to support extended family members in retirement, with 32 per cent expecting to financially support elderly parents and 22 per cent supporting their children.

Across the broader Australian population, 43 per cent expect to use retirement funds to help family members, including children (22 per cent), elderly parents (20 per cent), siblings (15 per cent) and grandchildren (10 per cent).

The generational squeeze describes a situation where one age group becomes caught between two cohorts of financial dependents during retirement.

About one in five millennials expressed low confidence in their ability to support dependents in retirement, while 42 per cent of baby boomers and Generation X reported similar concerns.

Findex co-chief executive Matt Games said supporting dependents represents a hidden retirement cost often overlooked in financial planning.

"Financially supporting dependents in retirement tends to be a hidden cost," he said.

"We have clients coming to us with their retirement goals and expected expenditure, and often this excludes accounting for supporting dependents."

Games noted the Association of Superannuation Funds of Australia retirement standard of $73,011 annually for couples and $51,805 for singles does not factor in dependent support costs.

"It is vital for Australians to not only have a strong understanding of their own financial position and potential spending in retirement but to also engage, early on in transparent conversations with their own parents and older kids, to understand how their wider family unit will require monetary support so they can navigate the potential pressures of the 'Generational Squeeze'," he said.

The research identified retirement aspirations including establishing passive income streams (46 per cent), travelling extensively (44 per cent) and improving living standards (40 per cent).

Nearly one-third of Generation Z respondents (31 per cent) want to retire before age 60, while most millennials (37 per cent) prefer retiring between 60 and 64.

Generation X and baby boomers anticipate later retirement between 65 and 69.

However, retirement aspirations often clash with financial reality, with main concerns including running out of money (54 per cent), physical and mental deterioration (50 per cent) and unexpected expenses (44 per cent).

Only one in four Generation X and baby boomer respondents believe they will retire at their preferred age, with 35 per cent considering it unlikely they can afford comfortable retirement until average life expectancy.

Younger generations showed more optimism, with 74 per cent of Generation Z and 69 per cent of millennials believing they can retire at their desired age.

Different generations are adopting varying strategies to secure retirement funding.

Generation X and baby boomers focus on lifestyle sacrifices, with 46 per cent considering postponing retirement beyond 65, 34 per cent scaling back major purchases and 24 per cent considering early downsizing.

Millennials are pursuing wealth generation through additional income streams (47 per cent) or second jobs (24 per cent), with 42 per cent recognising the value of professional financial advice.

Generation Z respondents are making early life decisions to reduce retirement costs, including 14 per cent choosing not to have children and 27 per cent opting for fewer children.

Games emphasised the importance of tailored financial planning for each individual's circumstances.

"Everyone's financial situation is unique, and this is an opportunity for Aussies to evaluate what they want in retirement, consider their financial standing – and as we know, their wider family unit's financial standing – to better prepare for this life stage without needing to work longer, harder or sacrifice comfort," he said.

The research surveyed 1,000 Australian respondents through YouGov in March 2025.

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