Young-old wealth gap is worst its been in 18 years: Actuaries Institute

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A new Actuaries Institute report has revealed that your children will not necessarily be better off than you, with the relative wealth and wellbeing of 25-34-year-olds the lowest in 18 years.

The publication, Mind the Gap - The Australian Actuaries Intergenerational Equity Index (AAIEI), tracks 24 indicators over six areas relating to wealth and wellbeing across different age groups. The intergenerational wealth gap started to widen in 2012 and has continued to do so, say the researchers.

Key findings include:

  • Younger people have better health, education and social outcomes than other groups

  • Younger people, however, have lower wage growth, masked underutilisation and lower levels of homeownership

  • Government spending has increased in older populations (from 3.7 per cent of GDP to 4.5 per cent for 65-74-year-olds) but has stayed stagnant for 25-34 and 45-54-year-olds

The report’s authors include Hugh Miller, Ramona Meyricke and Laura Dixie, all PhDs in statistics, financial economics and physics respectively.

Dr Miller said: "We are all very used to the idea our children will live better lives than we do. We expect continuous improvements in government services, better products, higher incomes, and improved health.

“But an increasing majority of parents fear that as today's children grow up, they will be worse off financially than their parents. There are a broad range of economic, housing and environmental issues that appear to be worsening."

Elayne Grace, the Actuaries Institute’s chief executive said: “It is very important to understand how equity is changing between generations over time.

“It helps inform public debate, and government policy, to deliver the best and fairest outcomes for all Australians. We need policy and outcomes that are sustainable."

The report suggests reviewing unemployment benefit rates, tightening up superannuation tax concessions, and taking greater action to deal with climate change.

Read the full report (PDF) - Mind the Gap - The Australian Actuaries Intergenerational Equity Index