In late 2015, the Australian Bureau of Statistics (ABS) released some pretty interesting information about the generational breakdown of income and wealth distribution in Australia.
One of the key findings of the Household Income and Wealth analysis was that the Baby Boomers (aged 45-64), who make up 25% of the population, are on average earning more than half of the total wealth – up to 53%.
For some this figure won’t particularly come as a surprise, and the findings do support recent claims that the Boomers have priced younger generations out of the housing market, making it harder than ever for young people to get ahead.
Take a look at our summary of the current standing of each generation based on the ABS findings.
Generation Y (aged 25-34)
Making up 15% of the population and earning an average household income of $113,152, Gen Y holds 7% of the national wealth. However, with a steady increase in university degrees and a growth in the number of students choosing to take gap years, many Gen Y’s careers are only just beginning.
Currently, these Gen Y households earn more than the Older Boomers (aged 55-64) who are winding down their careers, yet annual income increases for Gen Y are far lower than that of previous generations. In the last two years wage growth for this generation has been as low as 5%, only covering the cost of inflation.
Generation X (aged 35-44)
While Gen X is only one decade older than Gen Y, their net worth already far exceeds that of Gen Y. Gen X makes up 14% of the population and holds 14% of the national wealth.
The average household income is $130,156, not a great amount higher than Gen X. However, their net worth is $573,300 – a whopping $304,500 more than their younger counterparts. That’s more than double!
Younger Boomers (aged 45-54)
Making up 13% of the population, the younger decade of Baby Boomers are earning the highest household incomes, bringing in on average $137,800 per annum.
While again, this isn’t a huge amount higher than what Generations X and Y are earning, the Young Boomers average household net worth has skyrocketed to $944,900. It is believed that this large figure could be due to the Boomers’ tendency to focus on investments as a form of income rather than relying on their salary alone.
Older Boomers (aged 55-64)
When it comes to net worth, the Older Boomers are unsurprisingly in the lead, with a household average net worth of $1,239,700 and hold 30% of the national wealth while making up just 12% of the population.
The average household income has dropped significantly down to $111,852 for this age group, with many households choosing to cut back on their employment and enter early retirement.
Builders (aged 65+)
Expectedly, the Builders’ incomes have dropped to an average of $55,718, and will continue to decline, but with an average net worth of $1,040,550 and 26% of the national wealth, the builders are sitting pretty.
The Builders age bracket makes up 15% of the Australian population, which equates to around 3.6 million people. With so much accumulated wealth, it is likely that the next few decades will see this cash start to benefit younger generations, whether it be through increased spending or through inheritance.
Keep in mind, these are just averages. At any age, a good financial standing comes with careful planning. To learn how to manage your money wisely, give us a call on 03 9600 2124 today to set up an appointment with one of the Rising Tide financial planners.