Younger people have it worse than their parents: report

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Today’s 30-year-olds may be more educated than previous generations were at that age, but they are also much poorer and will struggle to get into the property market, says a new Australian Actuaries report.

So who – or what – is to blame for this inequality?

The popular response from older generations is to blame millennials’ lack of financial discipline. And in some cases, that may be true.

However, in its latest green paper, Mind the Gap – The Australian Actuaries Intergenerational Equity Index, the Actuaries Institute says the ‘gap’ is more likely to be due to government spending that is biased towards older people and asset prices rising much faster than incomes – due in no small part to record-low interest rates.

The report is based on an analysis of 24 indicators across six domains: economics, housing, health, social, education and the environment.

The heaviest weighting in the index was given to economics, with 30 per cent, followed by 20 per cent to health and disability indicators, 15 per cent to each of social and the environment and 10 per cent to each of education and housing.

It revealed that young people have much better health, education and social outcomes than previous generations of young people.

But when it comes to economic, housing and environmental outcomes, they are worse off than their parents and grandparents.

The index, says co-author Dr Hugh Miller, challenges the perception that “our children will live better lives than we do”.

“We expect continuous improvements in government services, better products, higher incomes and improved health,” he said in a New Daily report.

“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.”

The indicators show that increasing underemployment and a lack of public funding for younger cohorts has them at a disadvantage.

For the past decade, total government spending on the 25–34 and 45–54 age brackets has stayed at around 3.5 per cent of GDP. But spending on people aged 65 to 74 has risen from 3.7 per cent of GDP to 4.5 per cent in that same period.

Governments spend $37,750 per capita on people aged 65 to 74 but only $16,250 per capita on people aged 25 to 34.

The home ownership rate among people aged 25 to 34 has also fallen from 51 per cent in 2001 to 37 per cent in 2018.

“Some falls are visible in other generations but on nowhere near the scale seen for young people,” said Dr Miller.

The lack of home ownership is seen as a major contributor to the widening wealth gap between generations.

Home ownership rates are higher for older generations as they had more time to save a deposit.

According to the authors, it’s more difficult for younger people to save for and buy a house.

Assets prices are rising much faster than wages. And record low interest rates are boosting housing prices even further and making it difficult for younger people to accrue interest from their savings.

“The average young person faces challenges their predecessors did not: wage stagnation and rising underemployment, large government net debt and growing pressure on government budgets driven by increased government spending on pensions and healthcare for older households,” said Dr Miller.

The report also touched on climate change and how future generations will undoubtedly witness the worst effects of environmental decisions made by previous generations. Which may make the fact that people born today are expected to live 20 years longer than people born in 1920 a little harder to stomach.

While the index makes no specific recommendations, it did suggest that governments could review unemployment benefits, remove overly generous superannuation tax concessions for wealthy retirees, include a retiree’s home in the Age Pension asset test and replace stamp duty with “a land tax to remove the tax burden of ‘right-sizing’ a household’s home”.

“Younger people have been relatively disadvantaged across a range of measures in the past few years,” say the report authors.

“While older people are the most vulnerable to the worst health impacts of COVID-19, the economic impacts of the pandemic have brought many intergenerational issues into even sharper relief.

“Younger workers have been more likely to lose income and less likely to qualify for government payments, such as the JobKeeper payment.

“Significant increases in government debt will take decades of fiscal restraint to reduce as a fraction of GDP. These negative economic consequences will impact younger generations for years to come. Major slumps in incomes plus higher unemployment among younger generations could place significant pressure on intergenerational social contracts such as government pensions, which are effectively claims on the future earnings of younger generations.

“Now more than ever, it is important to understand how intergenerational equity is changing over time.”

Do you agree with the findings of this report? Are there areas you take umbrage with?

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Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?



Total Comments: 19
  1. 0

    No mention of the issue/attitude of “entitlement”?

  2. 0

    “Do you agree with the findings of this report? Are there areas you take umbrage with?”

    The report is too full of generalities and subjective comments as seems to be the norm for any reports from the Actuaries Institute. There is a gap in the findings as regards the type of housing being sought by younger buyers. A lot of grandparents and parents bought older houses as a first home, made some repairs and improvements, achieved an equity enabling sale and updating to a better home. They also had help from relatives with furnishings. Some younger buyers are looking at new homes and want to fill the double garage with vehicles and, of course, new furniture. Some younger buyers aren’t prepared to make the sacrifices that grandparents or parents made by not going out for entertainment or eating out but staying at home and saving money for deposits.

    • 0

      I agree very general and no mention of the time frame of the comparison. Tell a young couple that it may take a few years of saving for a deposit and during that time, they can only eat out for birthdays and anniversaries if they are lucky. Tell them that holidays will be on hold and working two jobs may be the norm for a while. That’s what we had to do, just to buy a ‘fixer upper’ in an ordinary suburb away from the city. The report also fails to acknowledge the credit squeeze in the 60s, the high interest rates of the 80s and the unemployment in the 90s, or the ‘recession we had to have’.

    • 0

      I SO agree with both of you. And of course do they take their morning tea and lunch to work every day for years like I did. Do they go to the movies and take a bottle of water and a couple of chocolate biscuits for snacks like I did. Do they plan ahead and prioritize saving for a deposit on maybe a small unit first and then build up to a house on land. Do they travel on public transport or do they have cars? Do they very rarely go out for dinner? Even to this day do I tattoo my body with art, wear piercings, colour my hair a different colour every month, buy handbags and shoes to match every new outfit etc. etc. etc. They can cry all they want. Until they are prepared to make the sacrifices I have made I am not interested. It is every man/woman for themselves on this planet so they need to wake up to themselves.

  3. 0

    Interesting as it seems my parents born 1915 – 1919 were not able to buy a home or motor vehicle despite working extremely hard at all times and not able to afford family holidays even locally.

    The next age bracket, my generation, in some cases were able to work hard and save for a modest, basic 3 bedroom 10-12 square home in the outer suburbs of Sydney, some by inheritance having the luxury of a small, second=hand family sedan whilst having an allocated amount to spend on food and essentials for the family with the necessity to eliminate the least needed goods on a regular basis. Again, no family holidays, meals at restaurants, take-away meals etc – a trip occasionally to the nearest beach or river for a swim and run-around in open spaces. My children who are now in the late fifties also did not have overseas holidays, new motor vehicles and regular sessions at the clubs and hotels for meals and drinks, choosing instead to work hard and save, again to be able to buy an average sized home for their families gained from a little help where possible from Mum and Dad and pure hard work and budgeting while ensuring their children had a good education, health and dental care and a secure family environment. Yes, I acknowledge the fact that as a result of hard times created by COVID-19 our millenials will certainly find a lot of quite difficult times ahead but just maybe it will pull back into reality a little hard work and sacrifices from having to make choices. Me, myself and I !

    • 0

      Spot on Koro, Couldn’t have said it better myself.
      Maybe putting the interest rates back up to 18% might help to.

    • 0

      Yes, Koro, I agree with you;
      One point I make is, ‘Real Estate Agents’ in my opinion, are responsible for the ridiculous house price rises.
      e.g. a few years ago, I moved interstate to join my family selling my small unit, I was asking $120,000. The agent sold it for $210,000. just as well because I was able to buy near my family without debt.

    • 0

      SAN.cit.90. How are real estate agents to blame for house prices? And wow, how lucky you were to get such a good price for your unit. It can take weeks- or even months for a property to sell.
      When I see all the expensive toys the children have today I wonder where all the parents get the money as they are always saying how hard it is to manage. Young people expect a lot more than we older ones ever did. And look at all the clothes they have to day. I know parents who would never let a child wear hand me downs. It might hurt their self esteem. w they want two bathrooms and feel their children must have a bedroom of their own. And their own TV. The problem is that the younger people don’t know how to actually, cut down and save. To them most things are a necessity.

  4. 0

    Such a limited view of ‘life’ A almost useless report as so biassed in report survey & comparsion. Every generation has issues & limits & challenges.

  5. 0

    Ah yes, the pampered baby boomers come out slagging the younger generation. The baby boomers are the luckiest generation ever to have lived in Australia. Steady economic growth (few major recessions), almost constant wages growth, no major wars, huge advances in medical science resulting in highest life expectancy ever, and, most importantly, affordable housing (can be measured: average wages versus average house prices) and for some, free uni and defined benefit superannuation. The latter two have gone. Incidentally, I am a baby boomer.

    • 0

      John, the slagging is deserved. Sure, us baby boomers had a pretty good run, but we didn’t expect (much less have) a four+ bed, 2+ bath, 2+ living room new or near new brick and tile with landscaped gardens, swimming pool and two late model cars in the garage. We didn’t expect to (nor did we) holiday overseas. We paid a king’s ransom for furniture and household items, clothing, and appliances compared to today’s cost (figured in hours worked at average pay rates). We paid huge interest rates, which made the lifetime cost of owning a home far higher than the young face today.

      We had a good run, and I have nothing to complain about, but millennials have it far, far easier. Of course COVID may change that, but that’s hardly the fault of the baby boomer generation and I am heartily sick and disgusted with this ongoing whinge and blame game. If life is tough, get off your bum and work harder. We did.

      BTW. I couldn’t give away beautiful high quality furniture when I downsized. Don’t tell me the young have it tough when only brand new will do!

    • 0

      Pampered? I like many had to register for national service, many of my friends went to Vietnam, you might not consider that a major war but just ask anyone that went or ask anyone who still suffer the effects of agent orange, they might disagree with you. Where do you get the idea that we had the opportunity to go to university, I don’t know a single person that went to university, most of the people I knew left school at 15 and some handed their wages over to help with the family expenses, when I married both myself and my wife worked and took every hour of overtime that was offered, when we started a family my wife stayed at home, I worked two jobs clocking up to 80 hours a week, our first home was a two bedroom fibro home outside dunny one bathroom, an all in one lounge, kitchen and dining room, most of our furniture was hand me down or second hand, our first car was an old bomb that we had to share depending on who needed it the most. Yep we sure were pampered!

  6. 0

    As with many studies this one uses a common error of using age as it’s main parameter. We I start work it was at the age of 17,and my wife was 15. We then whilst working did many years of night school to gain tertiary qualifications. (Which I paid for myself upfront each year including textbooks). Most of the young people these days do not commence working until they have obtained their tertiary qualifications fulltime, with subsidies, and can pay it off from their higher incomes. To make such a comparison you use the parameters that are much more relevant.such as years of employment, a very cheap car if any, A very small cheap house, with very old second hand furniture. Only then would you have an apples for apples comparison. The young people today expect everything to be given to them, and are not willing to make do and go without until they can afford things. In other words they do not know or understand living within their means. They are unfortunately for them the now generation, wanting the best of everything and wanting now. They do not realise that many people retiring now have worked for 45 to 50 years, going without before getting the nice house, with nice furniture, going on overseas holidays. Personally I went on my first overseas holiday when I was 55. All previous holidays were cheap camping trips.

  7. 0

    Well as usual we have left out the most significant indicator. The most significant factor come indicator in large proportions of the millennial being financially inadequate, relates to our reframed education system. Reframed to suit girls above boys.

    Since reframing the education system since the 1980s onwards to make it suit girls above boys, we now have an educations system that has girls making up 60% of University entrance numbers, compared to 40% for boys. Subsequently those with financial inadequacy a (say) 30 years of age, are predominately male, with that inadequacy to be extended through on-going years. The University based qualification type employment can also be identified with the guaranteed Superannuation type provision within Public funded employment

    What a marvellous cultural achievement. Do we have the moral aptitude to address this human (female) made inequality.

  8. 0

    My friends and I were able to buy a house because we bought small, old houses which we gradually renovated and furnished with second hand furniture.

    All our spare money went into the mortgage because it didn’t go on fast cars, iPhones, multiple overseas holidays, socialising, drinking, eating out, gambling, gyms, concerts, brand name clothes, etc. And our mortgages had a 17% interest rate. How many millennials could handle all that?

  9. 0

    the problem that is currently created is because we have too many migrants . to many people and not enough infrastructure to service the people . in the 60s and 70s there were no problems getting into hospitals no problems getting to see a specialist. housing was going along steadily people could afford a house because they were willing to work hard and not want all the luxuries when they moved in. I lived in a caravan for 8 years to save to buy my first home which cost $35000 despite high-interest rates. I continued to work 6 and 7 days a week travelled around the country. I was lucky though because I had continuing work with the one employer. I am now comfortable off on a self-funded retiree But the government stuffed this up by bringing in contracts which do not give our young people any security in their job so very hard to plan a future life. governments and unions are the cause of the problems we are having today. yes my generation had it fairly good but we had to work for it.



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