Wealth gap widens across gen­er­a­tions

Townsville Bulletin - - NATION - AN­THONY KEANE

OLDER gen­er­a­tions are grab­bing a grow­ing slice of the na­tion’s record wealth as their chil­dren and grand­chil­dren slip fur­ther be­hind.

An anal­y­sis of Aus­tralian Bu­reau of Sta­tis­tics data stretch­ing back more than 15 years shows that the av­er­age net worth of peo­ple near­ing re­tire­ment has grown by seven times as much as 25 to 34- yearolds.

To­day’s 55 to 64- year- olds are worth an av­er­age $ 1.24 mil­lion – an $ 844,000 in­crease since 2000, while those in their late 20s and early 30s have av­er­age net worth of $ 269,000, up $ 120,000 in the same pe­riod.

Econ­o­mists and so­cial re­searchers say the wealth gap will widen as ris­ing prop­erty prices and su­per­an­nu­a­tion bal­ances lock out the youngest work­ers from build­ing big money quickly.

ABS data shows Aus­tralians over­all are en­joy­ing record wealth, in­clud­ing more than $ 1 tril­lion in cash de­posits and $ 836 bil­lion in shares. It also shows that su­per fund bal­ances have surged for older work­ers but have stag­nated for un­der- 25s.

Eco­nom­ics & Be­yond chief econ­o­mist Jeff Oughton said higher wages of older Aus­tralians in­creased their wealth faster as at least 9.5 per cent of their in­come was added to their su­per each year.

“It’s not just ris­ing as­set values, it’s the com­pul­sory su­per­an­nu­a­tion sys­tem. More is get­ting saved each week and they are get­ting wealth­ier,” he said.

“Av­er­age Aus­tralians still only re­tire with $ 150,000 in su­per but the young Aus­tralian just start­ing work has zero.”

Older peo­ple used ex­ist­ing as­sets such as prop­erty and shares as lever­age to buy more as­sets, Mr Oughton said. “All these things sup­port a widen­ing in wealth dis­par­ity across gen­er­a­tions.”

So­cial re­searcher Mark McCrindle said the tra­di­tional road to wealth had been through own­ing a home, “but we have changed the rules of that and younger peo­ple aren’t get­ting that foothold”. “The younger gen­er­a­tion have lost out on growth be­cause they don’t own prop­erty,” he said.

The fac­tors that cre­ated the wealth gap were now locked in, Mr McCrindle said.

“The prop­erty own­ers are the Baby Boomers and older Gen­er­a­tion Xers, while the gen­er­a­tion locked out of the prop­erty mar­ket in cap­i­tal cities are the Gen­er­a­tion Ys.”

Com­mSec se­nior econ­o­mist Sa­vanth Se­bas­tian said a tran­si­tion of wealth was com­ing in the next cou­ple of decades that would see older gen­er­a­tions pass down wealth – mainly to their Baby Boomer and Gen­er­a­tion X chil­dren.

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