The old are getting richer and the young are getting nowhere.
That’s the crux of a new report from independent think-tank Grattan Institute, which has found rocketing property prices plus rapid increases in government pensions and services for older people risk creating a generation of cash strapped young Australians.
The meticulously researched report looked at how the wealth of different age groups has changed since 2003, and the good news is most Australians are way better off.
An average 55 to 64 year-old household was $173,000 richer in real terms (that means inflation has been removed) in 2011-12 than a household of that age in 2003-04. The average 65 to 74 year old household did even better, with their wealth improving by $215,000 over the same period.
Even 35 to 44 year-olds did OK, gathering an extra $80,000 in their accounts over the period.
But then it gets ugly. The worst affected group were 25 to 34 year-olds, who had less wealth than at the start of the eight year period despite saving more than they did in the past.
Why the stitch up?
This chart pretty much nails it.
Property is the biggest punch in the guts, with a lot of older households making booming capital gains on real estate over the last eight years. That’s made it tough for young adults to get a foot on the property ladder, which is why our group have lower rates of home ownership.
Young adults are also getting paid less, with incomes growing fastest for older Australians, allowing them to add more to their wealth by saving.
The old fogies also get a bigger slice of the government budget through health and welfare spending, too along with some lovely superannuation tax breaks.
But there’s not much we can do about that.
The key to crashing out of the bell curve is getting smart about your money now and learning about saving and investing. Check out our super savvy Save and Invest sections for some sharp tips to get started today.
Image: half alive – soo zzzz, via Flickr