Retirement
Intergenerational wealth gap grows to 2-decade high
Falling rates of home ownership, government spending skewed to older Australians and deteriorating environmental factors are causing intergenerational wealth to grow, new research has shown.

Intergenerational wealth gap grows to 2-decade high
Falling rates of home ownership, government spending skewed to older Australians and deteriorating environmental factors are causing intergenerational wealth to grow, new research has shown.

The Actuaries Institute has found that the gap between generations is growing, with those aged 25-34 with relative wealth and wellbeing sitting lower than it has at any time over the past two decades.
“The wealth effects of the housing boom, plus rapid increases in government payments on pensions and services for older people are key reasons that young Australians today have relatively lower wealth and wellbeing index scores than that of their parents at a similar age.
“Deteriorating environmental conditions have also had a significant negative impact on intergenerational equity,” actuary Hugh Miller stated.
The report noted that from 2012 onwards, there was a marked increase in the index for the 65-74 age band, while over the same period, there was a pronounced drop in the index for the 25-34 age band.
This period coincides with the Baby Boomers entering the 65-74 bracket and Millennials entering the 25-34 bracket, suggesting a wider gap between these generations than has been present for previous cohorts.
A similar gap exists between those aged 45-54 and those aged 65-74. Those in the older cohort are pulling away from both younger groups.
The index shows that today’s young people have significantly better health, education and social outcomes than older cohorts.
Life expectancy, the ultimate expression of health, continues to increase, with those born today expected to live an additional 20 years compared with those born in 1920.
Robbery victimisation rates and teenage birth rates have dropped, improving intergenerational equity, but incarceration rates and the number of children in out-of-home care have increased.
The proportion of individuals with at least a Year 12 education has risen to 70 per cent in 2019, from 56 per cent in 2000. Completion rates were much lower when the current cohorts, aged 45-54 and 65-74, were of school age.
Dr Miller said wealth varies over the course of a person’s life. In absolute terms, wealth for young people is increasing slowly. But the increasing gap is concerning, particularly if there are reduced opportunities for young people to change their circumstances.
“But we can see large deficits for economic, housing and the environmental domains,” Dr Miller said. “When focusing on change, particularly over the past five years, it is the movement of economic, housing and environment components that causes the slide in relative score,” Dr Miller concluded.
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