Older Australians today spend more and have higher incomes and greater wealth than older Australians three decades ago. But Generation gap: ensuring a fair go for younger Australians shows living standards have improved far less for younger Australians.
Strong economic growth has produced growing wealth and incomes which has afforded older Australians substantially greater wealth, income and expenditure compared with Australians of the same age decades earlier.
Young Australians, by contrast, have less wealth than their predecessors and are far less likely to own a home.The wealth of households headed by someone under 35 has barely moved since 2004. In contrast, older households’ wealth has grown by more than 50 per cent over the same period because of the housing boom and growth in superannuation assets.
And despite perceptions to the contrary, the wealth of young households hasn’t been frittered away on avocado on toast. Younger people are spending less on non-essential items such as alcohol, clothing, and personal care, and more on necessities such as housing, than three decades ago.
Wage stagnation and rising under-employment have exacerbated economic pressures and this is tougher on younger households. Older households are better able to withstand these factors because they are more likely to have other sources of income and a degree of financial security.
‘If low wage growth and fewer working hours is the new normal in Australia, then we could have a generation emerge from young adulthood with lower incomes than the one before it at the same age,’ the report’s lead author, Grattan’s Budget Policy Program Director Danielle Wood Wood says. ‘This has already happened in the US and the UK.’
There is plenty that’s troubling about this report about what the future holds for younger Australians. And consider this.
As it stands women aged 55 and over are one of the most financially precarious demographics in Australia. They represent the fastest growing group of homeless people.
And yet these women are members of the same generation which has experienced the extraordinary ‘once in a century’ housing boom that has contributed significantly to the wealth accumulated by older Australians.
This is the demographic whose wealth, as this report explains, reflects the rewards reaped from strong economic growth, wage growth, compulsory superannuation and a series of favourable tax concessions.
And yet women of this demographic are increasingly at risk of finding themselves homeless? Where did it go wrong?
If financial insecurity is the fate facing so many women – members of the lucky generation no less – what hope is there for younger women? Women who may not experience a property boom and steady wage growth and a robust economy?