Older Aussies are 'creaming it', says senior economist

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Retired Australians are creaming it, wrote Leith van Onselen, chief economist at the MB Fund and MB Super, late last year.

“The next time you hear a seniors’ group demand an increase in the aged pension [sic] and other subsidies, consider the latest Melbourne Institute’s Household, Income and Labour Dynamics in Australia (HILDA) report …” he wrote for macrobusiness.com.au.

“This report showed that Australians aged 65-plus enjoyed by far the biggest increase in wealth between 2002 and 2018.”

Mr Onselen then let the charts from the HILDA report do the talking.

The HILDA survey is a longitudinal study of Australian households and started in 2001. As of December 2019, 18 years of research were available to researchers.

The distinguishing feature of the survey is that the same households and individuals are interviewed every year, allowing the researchers to see how their lives are changing over time. And the study can be “infinitely lived”, following not only the initial sample members for the remainder of their lives, but also their children and subsequent descendants

So what has provoked Mr Onselen into asserting that older Australians are “creaming it”?

While the survey finds that retirees’ mean incomes continue to be “considerably lower” than non-retirees, they have grown markedly since 2002, with superannuation and housing the key factors.

“The mean equivalised income of retirees grew by 39 per cent in real terms between 2002 and 2018, compared with 29.7 per cent for the non-retired population,” the report says. “It bears noting that this is greater than the increase in the Age Pension over this period, indicating that other income sources were important to the growth in retirees’ incomes.”

Unsurprisingly, average wealth levels were found to be considerably higher among retirees than among non-retirees, but again it was the rate of that growth that stood out.

“Between 2002 and 2018, retirees’ mean wealth grew by 79 per cent and median wealth grew by 85.2 per cent, compared with respective growth of 55.7 per cent and 46.4 per cent for the non-retired population.”

The survey concluded that based on average income and wealth levels, the economic wellbeing of retirees had increased in both absolute terms and relative to the broader community.

The survey also yielded ‘welcome’ news on poverty rates among retirees, noting that they had fallen but “remained at least 80 per cent higher than for the non-retired population across the entire 16-year period”. But despite that alarming statistic, the level of financial stress was “much lower” among retirees than among the rest of the population.

“In 2018, 7.4 per cent of retirees reported experiencing two or more indicators of financial stress, compared with 11.9 per cent of the non-retired population,” the report said.

It is the areas of home ownership and maturing superannuation balances that have produced the biggest changes in fortune.

Home ownership among retirees defied the broader national trend. About 80 per cent of retirees were homeowners across the 2002 to 2018 period. In contrast, the proportion of the non-retired population living in owner-occupied housing declined from 69.9 per cent in 2002 to 65.7 per cent in 2018.

The figures above show that all three age groups experienced substantial increases in mean income and wealth with the 65-74 group reaping a 54 per cent increase in mean income and a 95 per cent increase in mean wealth.

But wait, there was more good news with those aged 65 and over reporting the highest levels of life satisfaction, followed by people aged 15-24. However, people aged 55-64 experienced the biggest decline in happiness since 2001 of any age group. And men’s life satisfaction remains consistently lower than women’s.

So does Mr Onselen have a point? Are older Australians “creaming it”?

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Total Comments: 22
  1. 4

    The downfall of the statement is that it works on median figure. There are plenty below the median figure that can use and appreciate increases in the pension.

    • 0

      I don’t know where they get their figures from but thst certainly does not apply to those on the Aged Pension that I know that only just survive on the Pension from week to week as they don’t have a home as they retired just after Super came in and they got nothing for working all those years !
      So tell her/him to get back to the drawing board and have proof about what the hell he is talking about before putting it in the News !
      It totally disgust me when someone does something like this and not be able to prove that there are 80 % Creaming it at the age he/she classifies as it would be more like 60% that may be doing better but there are 40% of us that are struggling to make ends meet each fortnight!

  2. 2

    This imbecile is probably related to Peter. If so enough said.

    • 0

      Agree mate there are many stupid ignorants of the reality we all live and things we have to do to have a decent life in retirement …… they only read books and made this kind of statements …. There is super easy to make a financial draw using MS-Excel just fill the cell and insert a column chart ….. There are so many financial people that only look at the surface of the financial position of a retirement group and a decision is made to build the chart using superficial figures and ignore any figure that represent a negative picture …. very easy to do just read Grumpy comments and many others in the chat ….

    • 0

      Or more like being related to Trump!


  3. 14

    The weakness of the conclusions is that they ignore context.
    It appears much of the retirees wealth growth is attributable to housing i.e. appreciation of house values. Fine! However the report does not make the observation that retirees cannot eat their home: they cannot use it to travel (except grey nomads.) If they sell it to get money to eat etc then their wealth will very quickly plummet as they have to pay rent etc, and lose the security of tenure. Forget not they worked hard, and saved to get this asset so eagerly eyed off by younger people who have not been prepared to go without to buy their own home.
    No mention is made of the adequacy of the income throughout the study period against the real costs of living. No mention is made of the fact that current retirees automatic entitlement to full pension has been squandered by politicians, in part to pay for the health and education of those now so envious of the retirees asset. No mention is made of the retirees having suffered mortgage interest rates of 14.5% pa, or more by those current home owners whose interest rates are being so heavily subsidised by the savings of the retirees.
    I’m sure there is a wealth of valuable, meaningful data in the the study, but the announcement by the economist is in my opinion a meretricious, and facile cherry picking of statistics to capture attention and enhance the professional reputation of the author i.e. a marketting excercise, rather than an attempt at enlightenment.

    • 6

      Great comments made by Grumpy most of which I agree with. One question though; can Grumpy expand on this part
      “”No mention is made of the fact that current retirees automatic entitlement to full pension has been squandered by politicians, in part to pay for the health and education of those now so envious of the retirees asset.

  4. 9

    With the figures defined as household wealth and exceeding $1m in one case then it must include assets such as the family house which does not give the report real world credibility.

  5. 12

    Anybody can appreciate that for most retirees the increase in wealth is due to increasing house prices, not increases in disposable income. It’s pretty silly to say someone is better off because the value of their home increases because in practical terms that makes no difference to anything.

  6. 11

    Two points – The median indicates 50% of retirees are below this point. Some very significantly. Also you can’t eat your house, so whilst property values may have risen significantly, your home is a lifestyle asset, not really a wealth asset, until you die and the property is disposed of.

  7. 6

    Take the value of the house out of the equation and some reality comes into the figures. Retirees may have a $1 m or more in their house value but do they sell it and go bush to live under a gum tree or in a tin shed?? Many would possibly still be struggling to survive in a reasonable fashion living in a multi million dollar house that they have lived in for a life time.

    • 1

      Do they sell it and move…..we did and don’t regret it at all. Built a new house, nice block and a wonderful town with all the amenities and services you could want for about half the price we sold our Sydney home for.

    • 2

      Where did you move to may I ask. I live rurally and the main problem is so far from medical and other services. No, I didn’t sell in Sydney and have struggled to survive throughout my live, so I haven’t even go a huge asset to sell.

    • 0

      Agree with joyful – moving to the country is not as blissful and rosy as greg says! I did this. I moved to a major rural town, in my early 60’s, whilst I was still working for a major company. After 2 years, company closed the rural offices and I then could not get a job doing anything. Openly told that preference was given to local applicants, not intruders, and nepotism was rife. The only job I did find turned out to be the worst job and worst boss of my whole working life. Social life was non existent (me being a single). Costs for simple repairs either ludicrously expensive, or not available. Need to buy most items on-line as very limited shopping choices available. My saving grace was that I had not sold my city home, but rents in country town were still high.
      Worst was lack of medical and health services. So I moved back to city. I might be poorer (not working) but I am happier and healthier. Actually, I am better of financially as I have more choice of spending power. Rather than having to travel 650kms for major medical treatment, now go 20kms. Lovely to have choice of shopping – I like to see and feel items. Love that I have 4 Aldi stores within 14 kms. Choice of power suppliers, getting repairs done for anything SO much cheaper. As much as I love the country (born and bred on land), it’s not the rosy panacea.

    • 0

      joyful56 – Wodonga

    • 0

      sunnyOz – It’s not for everyone, but this article is about retired people, not ones trying to get a job.
      Wodonga has great facilities and what’s not there is only 10 mins away in Albury. Health services are a joint effort between the two towns, with nearly 90,000 people there’s not much they don’t do there.

  8. 11

    “So does Mr Onselen have a point? Are older Australians “creaming it”?”

    This old joke has a point related to this question. Logic is a generalisation and doesn’t apply equally to all.

    Woman: Do you drink beer?

    Man: Yes

    Woman: How many beers a day?

    Man: Usually about 3

    Woman: How much do you pay per beer?

    Man: $5.00 which includes a tip

    Woman: And how long have you been drinking?

    Man: About 20 years, I suppose

    Woman: So a beer costs $5 and you have 3 beers a day which puts your spending each month at $450. In one year, it would be approximately $5400 …correct?

    Man: Correct

    Woman: If in 1 year you spend $5400, not accounting for inflation, the past 20 years puts your spending at $108,000, correct?

    Man: Correct

    Woman: Do you know that if you didn’t drink so much beer, that money could have been put in a step-up interest savings account and after accounting for compound interest for the past 20 years, you could have now bought a Ferrari?

    Man: Do you drink beer?

    Woman: No

    Man: What colour is your Ferrari?

  9. 3

    In yesterday’s world when the survey was conducted the conclusions reached by Mr. van Onselen, may have had some relevance.
    It’s stating the obvious but the economic landscape has altered considerably since 2018. Put
    succinctly, economic activity was severely curtailed during 2020, and it’s still unclear when
    the current restrictions will be lifted. Until this occurs, economies for the most part, will struggle to get out of second gear, which will inflict increasing economic hardship on persons tied to fixed incomes, especially retirees This is in stark contrast the survey’s conclusions which are untenable in today’s reality.

  10. 6

    A fairy tale. Lies, Statistics, Damn Lies.

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