Generational pay gap: The old become wealthier, while Gen Y goes backwards
The wealth of young Australians is lower than it was eight years ago, a new report from the Grattan Institute has revealed.
The Wealth of Generations report has warned that Australia’s younger workers are in danger of a lower standard of living than their parents at the same age.
While Australians are more wealthy overall than they were eight years ago, the increases in wealth decreased in line with the age of the group assessed.
An average 65-74 year old household was $215,000 better off over the same period. The average 55-64 year old household was $173,000 richer in real terms in 2011-12 than a household of that age in 2003-04.
However, the average 35-44 year old household was only $80,000 richer.
Australian 25-34 year olds had less wealth than people of the same age eight years ago in real terms, despite displaying stronger saving habits than their 2003-04 counterparts.
The report cited increases in home values, as well as rises in government funds for pensions and services for older people, as the changes that have favoured older Australians at the expense of younger workers.
Governments spent $9,400 more on each head of household over 65 in 2010 than they did six years before.
“The generational bargain, under which each generation of working Australians supports retirees while still improving its own standard of living, is at risk,” Grattan Institute CEO John Daley said.
The report suggested tighter targeting of the Age Pension, reducing superannuation tax concessions and a shift to increase taxes on assets in order to provide more equal financial support between the generations.