Baby Boomers hoard wealth while younger generations go backwards: Report
Thursday, December 11, 2014/
Wealth for 25 to 34-year-old Australians is stagnating
Baby Boomers are amassing a growing slice of Australia’s wealth while the wealth of young Aussies is sliding backwards, according to a report released this week.
The Grattan Institute research shows the housing boom and increased government spending on pensions and services will leave a generation of young Australians with a lower standard of living than that of their parents at a similar age.
The report measured the average wealth of different age groups in 2002 compared to 2011-12 and found most age groups are richer than they were in 2003.
However, the average 55 to 64-year-old household was $173,000 richer in real terms in 2011-12 compared to 2003-04, whereas the average 35 to 44-year-old household was only $80,000 richer.
The average 65 to 74-year-old household was $215,000 better off over the same period, while 25 to 34-year-olds actually had had less wealth than people of the same age eight years before.
While Grattan Institute chief executive John Daley says the Baby Boomer generation has not been deliberately selfish, he believes young Aussies will “pay” for the distorted distribution of wealth.
“The younger generations have already paid and are yet to pay,” Daley told SmartCompany.
“Every year the government posts a $40 billion deficit, it imposes a future tax liability of $10,000 on younger households.”
Daley says not since the 1930s has a generation been worse off than its parents.
Daley says the research also debunks the myth young Australian’s aren’t saving, as it shows young Aussies are saving more than people of a young age did in the past.
“It’s just not true that younger generations aren’t saving. Those children have been saving their post-tax incomes, just as much, if not more than their parents,” he says.
Daley warns the distribution of wealth will widen if this trend continues.
“The younger generation will wind up living in a society that is much less equal because, as we know, richer households are much more likely to inherit wealth. Society will get more unfair as a result,” he says.