The baby boomer generation will play a crucial role in saving the Australian economy, one market expert is predicting.
With their substantial wealth and strong purchasing power, baby boomers are expected to stimulate consumer spending, drive economic growth and lead the nation away from recession.
According to US economist Edward Yardeni, the baby boomer generation holds a staggering $75 trillion in wealth worldwide and instead of passing it on to their heirs, baby boomers will most likely spend it during their golden years.
This type of spending is expected to provide a much-needed boost to the Australian economy.
So far, the only economic tools used to try to kerb inflation have been the Reserve Bank of Australia’s (RBA) rapid interest rate hikes – directly affecting mortgage-holding households and particularly generation X and millennials with young children.
These groups have seen their disposable income diminish while their real earnings are eroding at an unprecedented rate.
In contrast, the baby boomer generation, consisting mostly of homeowners, remains largely unaffected by rising mortgage rates or rent increases. As a result, they have more disposable income at their disposal than younger cohorts.
Australians over 65 have accumulated an extraordinary $160 billion in savings over the course of the pandemic, while younger Australians have struggled to make any financial progress at all.
Baby boomers, benefitting from their financial stability and real estate investments, have continued to spend generously even in recent uncertain economic times.
While it’s true their consumption patterns have contributed significantly to the Australia weathering the economic storm from the pandemic, it’s also true that same spending has compelled the RBA to respond with higher interest rates.
It’s undeniable that the baby boomer generation has emerged as a crucial force in supporting the Australian economy, and their ability to spend and stimulate consumption has been instrumental in driving economic growth.
But it’s also undeniable that the impact of their spending on interest rates has disproportionately affected younger Australians, particularly those with mortgages. As the nation moves forward, it is essential to find a balance that ensures economic prosperity for all generations.
It may not seem like it, but the government has more options in its arsenal than simply raising interest rates in order to combat inflation.
The biggest alternative it has is to reduce government spending and/or increase tax revenues. But with the government seemingly set on passing the controversial stage three tax cuts that would see the wealthiest Australians pay far less tax than they do now, the chances of that happening appear slim.
Should baby boomers have to pay more tax? Or is it a reward for working hard all your life? Let us know what you think in the comments section below.
Also read: Will massive budget surplus be used to ease cost-of-living pressure?
My comment to your question: Should baby boomers pay more tax. Are you kidding me?
Over past 40 years we have paid millions of dollars in taxes and now what? We are punished at every occasion. Can’t even get cheaper medications. While those who paid less taxes, hadn’t worked that hard and in some cases never worked are getting government pensions. Australia has the more unfair system in the world by not providing an universal pension, because the eligibility is mean tested. It means those who worked the hardest get nothing. Every other civilised country has some kind of universal pension. In some countries pension amount is established by the amount a person earned and contributed in taxes during working years. This is a fair approach. Universal pension would save the government money, because the part of Centrelink checking eligibility could be dissolved.
We worked for over 40 years, raising children without paid maternity leave, baby bonuses, childcare subsidies, first home grants or stamp duty exemption, but we paid 18% home loan interest rate. Yes, loans were smaller but so were our wages. I was making $20,000 p/a and top marginal tax rate of 49% was kicking in at $36,000.
And now you are suggesting that we pay even more taxes? Ridiculous, just ridiculous.
I have always believed that everyone should pay what is reasonable and fair in the taxation system. That includes me, and I have worked all my adult life and now live on my superannuation pension. I have given what I feel to be fair toward charities that I support, and would also be prepared to contribute toward taxation if called upon. I have lived a comfortable life, own my own house, and have raised three children. Lost my husband three years ago, and we have lived a life without unnecessary luxuries but in comfort. I consider myself to have had a fortunate life, so I’m happy to be of help to those less fortunate.
the predicters are wrong.
not every person of that generation is wealthy.—some of us only have the fortnightly pension
to “manage” all of our expenses.– but WE are being grossly ignored.
Another generational war-mongering article. What this doesn’t say is that when interest rates were close to zero, it was the baby boomers who suffered most with their savings attracting zero interest. Not all Boomers are wealthy, nor are they a homogenous lot. So just stop with this generational war playing. It helps no one.
I’m not so sure about this thesis at all. It is the younger generation who couldn’t live without their phones, take- always, Über-Eats, new cothes, handbags, nail bars, facial and body enhancements etc wheras the older generations have lived most of their lives without these non essentials and can do so now. Frankly shopping is totally boring today, most stuff is cheap, Chinese made landfill which provides no excitement to buy or own. As virtually nothing is made in Australia any more, if buying foreign made items inflates the local economy, the retailers must be adding some very fat margins which is another reason for refraining from shopping.
Zielinski, I totally agree but that’s the system based on bringing in young, fit qualified migrants to work very hard, pay lots of tax to support locals who don’t want to get qualified or don’t want to work. There’s around 600,000 unemployed people who are so unskilled they can’t even do unskilled work. It’s also assumed that you will work so hard you can save enough that you will never be entitled to a pension. It’s called rewarding failure and punishing success! The best paid jobs are non-productive elites who get paid ten times as much for kicking a ball around a paddock as a doctor or nurse does for saving lives or a teacher does for teaching your kids. Do vidzenia!