11th Feb 2016
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Older Australians are financially comfortable: ME report

The release of ME’s Household Financial Comfort Report shows older Australians are more financially comfortable, whilst younger Aussies are struggling.

The report has found that the financial comfort levels of baby boomers and retirees has been on the rise for the past four years, due to steadily improving property prices and increasing superannuation balances.

However, these same property price rises mean that many young Australian families are facing housing affordability issues.

“The gap in financial comfort between older and younger Australians is widening – the younger generations are going sideways while the older generations are seeing it improve,” said consulting economist for ME and co-author of the report Jeff Oughton.

The rising financial comfort of older Australians is a good indicator that the superannuation system is working. However, there is still a general feeling that current rules mostly benefit high-income earners. Recent rule changes, which include the impending abolition of low-income super contributions in 2017, the tightening of Age Pension means testing, and deferring the rise in compulsory super payments, will hit low- to middle-income earners hardest.

“These policies all have winners and losers, and most of the losers are on lower to middle incomes and that tends to be women as well,” said Industry Super Australia director of policy Zak May. “The changes and ideas coming from government raise concerns about the commitment to the superannuation system, and helping everyone have a decent retirement.”

According to the report, retirees have an average net wealth of $577,000, while young families have around $366,000.

Young families are having difficulty breaking into the first home buyers’ market and, as a result, are more likely to rent. “The lower comfort among renters may be a reflection of the difficulty first home buyers are experiencing getting into the residential property market. Both house prices and rents are growing faster than incomes,” the report states.

Mr Oughton said that although the wealth of older Australians will eventually be shared through wills and estates, “they are very slow events”. However, it seems there is a growing number of parents and grandparents financially helping the following generations prior to intergenerational transfers.

“Some older people shake the younger peoples’ hands with a warm hand today rather than a cold hand later,” said Mr Oughton.

Read the Household Financial Comfort Report
Read more at www.news.com.au

Are you financially comfortable? Is your current financial situation reflected in this report? Do you worry about your family’s financial future? Have you lent, or would you lend, your children money?

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    COMMENTS

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    Mygasheater
    11th Feb 2016
    10:42am
    Don't people generally have less money early in their working life than later? The starting wage at age 18 is lowerto that when the person retires.

    Mind I have met a number of younger people with no skills and no experience, who start in the mail room who think they should be paid $150,000 pa from day one.
    jackie
    11th Feb 2016
    10:42am
    Now I can see why a 33 year old female can fall in love with a 76 year old man and desperately, go through IVF to try and have his baby. Such incidents will become more common.

    11th Feb 2016
    11:04am
    Any financial comfort of older Australians, for the greater part, has solely been on account of those individual's own hard work and foresight. The biggest cause of any difference in future retirees' lifestyle and those of today are those inept, short-term problem solving policy and legislative changes made in RECENT times by incumbent governments - very little else, other than possibly global economic changes, have as great an adverse effect don't kid yourself, the government is the biggest perpetrator to a falling lifestyle.
    mogo51
    11th Feb 2016
    11:31am
    Cheers to that Eddie.
    There is just no interest from either party to tackle this problem.
    For many, our Superannuation System which was a great idea, is nothing more than a tax avoidance system. Not what it was intended for.
    Rae
    11th Feb 2016
    4:35pm
    Yes Eddie we actually got back to where we left in 2006 on the markets today. Waste of 9 years of work except for the rebalancing and spending on travel. Sigh.

    And the youngsters think it is all beer and skittles. Bloody hard work as far as I'm concerned.
    retroy
    11th Feb 2016
    11:07am
    What a lot of rubbish gets published. When we were young we had almost nothing and then we got a mortgage so we had less than nothing.
    However as most people who are now comfortable, we set ourselves to work and accumulated enough to stay that way.
    I would say this is not new and has been a worldwide situation down through the ages.
    The big difference now is that young people want cars houses and fully equipped electronics while we bougt things only when we could afford them.
    Anonymous
    11th Feb 2016
    11:47am
    So right retoy it was called the Layby system.
    in2sunset
    11th Feb 2016
    12:02pm
    Totally agree, what a total lot of rubbish. At my age if 64, I look back to when I was in my early 20's and 30's, and younger people and families have it so much better now. I - and was a single female - owned a $300 car, worked my butt off and bought a dump of a house and did it up. Amazing what you can find at recycling depots. Maybe if younger people didn't expect a mansion for their first home, and a CEO's salary for their first wage.
    Jude
    11th Feb 2016
    12:29pm
    I totally agree, this is a lot of rubbish. I have five children who all have a lot more disposable income than we (older Australians) have. They just have a lot more things they want to spend it on. They HAVE to have expensive electronics, go out for expensive meals, go to the pub, buy coffees and so on. Paying off mortgages is not a priority for them as it was for us. I went without to pay off my mortgage! It is always the same, those who want to eat their chocolate straight away, do so, and then eye off the chocolate others have put aside for the next day!
    Rae
    11th Feb 2016
    4:42pm
    Yes and remember hire purchase to get a credit rating. We bought the stereo , vacuum cleaner, fridge and sewing machine that way.

    I did not have a car until I was 27 and it was a old morris minor that had one door that wouldn't open.

    My house would fit in the loungeroom of my kid's house. Yes they holiday, buy coffees, brunch, have netflix etc and really don't go without what they call a balanced lifestyle to pay a mortgage. There was no life balance when we started. It was pay everything to the bank or the child minder, no childcare rebates either or first home owners grants.
    Phil1943
    11th Feb 2016
    11:12am
    I was hoping nobody would notice just how cushy it is for me to be 73 years old and retired with an SMSF and no access to a pension or other government assistance. Damn. Now I've been found out. And to think, so much of my working life has been directed to paying for my own house that I've neglected to set aside money for my offspring that could have paid for their houses. Yes, I feel guilty. The 'financial comfort gap' is my fault. Since my house is my biggest asset the only solution I can think of is to sell it and for a couple of years spend the proceeds to find out what it feels like to really be a 'high income earner' then give the remainder to my children. Or the government which seems to need it so desperately to pay for things like submarines and Ambassadors to the US and UN. My apologies for getting it so wrong.
    Anonymous
    11th Feb 2016
    11:32am
    Love it! Yes, it's wonderful to be in a position like that which enables you to give the "Hawaiian good luck" digital gesture (mentally, of course) to whomever and whatever you don't approve of. Enjoy!
    Rosret
    11th Feb 2016
    11:26am
    When I look around me at the massive homes, beachside with a retired couple with the occasional visitor I would tend to agree. However it needs to be remembered that these people have probably made their fortune from a $20k home purchased in the 60-70s in an average suburb of Sydney. They have benefited from the greed/need of a younger generation. However not all baby boomers are financially sound. It was the generation of divorce and a huge change in expectation of woman's roles. If she wasn't lucky enough to get a tertiary education then her pay packet was well below that of a man. Often they had no super and a family to raise. These women are now retiring. - I am sure there is a parallel universe for men in adverse conditions too. If there wasn't, the government wouldn't be targeting the pensioners so virulenty.
    Yes, I have no idea how the younger generation afford a home, I have no idea how they can commute through Sydney under less than 3hr a day and get to spend time with their children. Our country, although more prosperous, has actually lowered its standard of family living.
    jackie
    11th Feb 2016
    11:39am
    Most of those people would have been born with a silver spoon in their mouths. Just like our Prime Minister and Donald Trump.
    roy
    11th Feb 2016
    8:18pm
    jackie, envy will be the death of you, take care now.
    Rosret
    15th Feb 2016
    9:57am
    Actually Jackie, no. There are a lot of very successfull wealthy people who have benefited from Australia's amazing growth in the last 20 years and were just ordinary average income earners.
    We haven't been at war. We have profited from the mining boom and the success of many industries. We are the lucky country - I just want it to keep on being the lucky country.
    However - not all are so lucky and they need to be remembered.
    Andover
    11th Feb 2016
    12:05pm
    Hmmm- while I accept your comments about unrealistic expectations on the part of the young, there is more to it. Both my children have emigrated overseas for better opportunities - one on a university education that she worked three jobs to get and one on a labourers' wage. Neither could get what they wanted out of Australia anymore -my uni educated one cannot get job opportunities In Australia and my labourer can not afford to buy a house in Australia so he has bought overseas and his skills are being well received there and training is less expensive there. Both have gone to first world English speaking countries. Neither expect to come back to Australia. Brain drain and economic drain for our country. There are serious consequences for what is happening for our youth. We cannot afford to be complacent. The market-driven forces our children face are serious
    roy
    11th Feb 2016
    8:19pm
    Rubbish.
    Anonymous
    12th Feb 2016
    7:52am
    Utter crap! There have always been people who went overseas for better opportunities. Taking money off retirees to give a few grossly overpaid greedy and selfish young people enough to keep them in the country isn't going to solve anything.

    Labourer can't buy a house? Only if his expectations of comfort are too high and he's lazy. Sorry. I've seen plenty of people on basic wages buy homes. When we couldn't afford to buy one, we got an owner-builder license, picked tradesmen's brains, volunteered as tradesmen's helpers on weekends to learn, and built our own - living in a shed for 5 years with 3 kids while we did it. It was a LOT harder back then that it is today.

    And anyone uni educated who is willing to work and competent at their trade can get a job in Australia. If that's their motivation for leaving Australia, Australia doesn't need them. That's not ''brain drain'' or ''economic drain''. That's natural attrition.
    Dallanhk
    11th Feb 2016
    12:12pm
    I'm sorry, this is rubbish. The reason we oldies have (some) money now is because we saved, planned and did without fancy stuff when younger. The modern young generation want it all now. Holidays abroad, new cars, fancy gadgets etc etc. If they really want a house they should sacrifice and save, if they really want to be comfortable later they need to plan. Simple as that.
    Supernan
    11th Feb 2016
    12:30pm
    I do think people who retire with lots of Super can be confortable. But if you were a small business owner, you dont usually have any !

    I agree with comment about huge homes. Whatever happened to kids sharing bedrooms. Todays families are smaller so whay must they all have 4 bedrooms, plus a play room, lounge, media room, study, etc. No wonder they are struggling ! In out first house we had a bed, wardrobe, table & 4 chairs - no sofas, no spare bed, etc. We bought as & when we could, recyled packing chests, use bricks to make book cases, etc etc.

    No help from our parents either !
    Anonymous
    12th Feb 2016
    7:54am
    Most retirees today don't have super, Supernan. It's not just small business owners. The majority of workers had no super until 1994, and even then low income earners had none, despite having ''employer funded superannuation'' accounts. So little went in that the admin fees were higher than the contributions!
    Wstaton
    16th Feb 2016
    1:00pm
    Huge homes mentioned reminded me of something my Step daughter told me. (they live in a tiny home)

    Her 5 year old daughter, Scarlett had a birthday party where a lot of her friends were invited.

    She proudly showed one of her friends her bedroom. Her friend looked around and said. "Wow it is so small" Scarlett was apparently not fazed by this replied. "Oh that because I am small"
    Jude
    11th Feb 2016
    12:32pm
    "According to the report, retirees have an average net wealth of $577,000, while young families have around $366,000." Wow, why is there such a small differential? You mean for all those extra years of work all the older Australians have is an extra $211,000? I would be asking why the gap is so small!
    Anonymous
    11th Feb 2016
    2:33pm
    I would be saying the size of the gap indicates older Australians are doing it VERY tough and need young well-heeled taxpayers to cough up more so pensions can be increased and the means test eased. If oldies only have $211,000 more - to last through up to 3 decades of inflation and $0 earnings - than young folk have to kick off their retirement funds which they will be adding to for 3 decades or more, we are hard done by indeed and they are far better off than any previous generation.

    I would have celebrated having $5,000 in the bank at age 30, and we had a massive mortgage on a 2-bedroom 30-year-old run down cottage with leaky plumbing. There was no such thing as superannuation. I saved for three months to buy a pair of blankets. And holidays and restaurant dinners were luxuries we HOPED we might enjoy when the kids started work. At that time, my very poor mother had more than ten times my net wealth, and I accepted that she should really have had much more than that. Naturally older folk SHOULD be much better off than the young, otherwise why did they work for decades, and how will they survive their old age?
    peedee
    11th Feb 2016
    1:27pm
    Not sure what this article is really all about. The difference between being comfortable and struggling seems to be $211,000.
    Given that the boomers are about 35 years ahead of the young ones that represents a required net gain of around $6000 plus inflation per year required by the younger ones to reach comfortable stage. Super at 9% more than covers this.
    The difficulty of getting into the home market has always been there. When we did it there was a requirement to have 25 % deposit and only one wage without overtime was taken into account for the loan approval.
    As for wealth going up the report writers have been asleep for a few months given that my super has dropped by over 10% since last August.
    My wife and I started with nothing in the early 1960's. We lived with my parents for a couple of years just to survive. We were lucky that we were both able to work, raise a family, buy a home and live to retirement.
    We did not have flash cars , 5 bedroom home, multiple flat screen TV's or mobile phones. In fact we did not get a phone until the early 1970's.
    Both our children have purchased homes but they too started modestly and have built themselves up. So for the young ones it is just a normal road ahead.Patience and work will win out.
    For all our efforts we ended up as one of the so called Joe Hockey super rich partially self funded retirees that the new asset test will knock out of the system.
    It is difficult for me to equate that the difference between struggle and well off is only $200,00, and the difference between struggle and super rich ( asset test cut off point) is less than $500,000 which is less than 2 years wages for a federal politician. There are some bad perceptions out there in the noddy land of report writing.
    So for those that are healthy and able to work suck it up just like most of us did. For those that are unfortunate and cannot move forward for whatever reason lets hope government and social activists keep up the pressure to look after those that are unable to help themselves.
    bartpcb
    11th Feb 2016
    2:06pm
    This is just another feeble attempt to stigmatise the older generations so the government won't be held to account for attacking Superannuations and pensions. Hopefully it won't work because the growing number of pensioners will vote out any government that attacks their (the pensioners) long hard earned retirement funds. The young doing without?? Does anyone else from the 50's remember bread and dripping for tea??
    Anonymous
    11th Feb 2016
    2:23pm
    Absolutely, bartpcb! And none of the luxuries young folk take for granted'. I am so over this BS about the young doing it tougher. It's all lies. And actually, this article proves it! Apparently, they have only a little over $200,000 less in the bank than the average oldie, and the average oldie has to live on it for up to 30 years, with high inflation, without earning any more, whereas the young have 30 years of increasing earning power ahead of them.
    peedee
    11th Feb 2016
    2:32pm
    Yep. And mince meat on toast, and my mother walking from St. Kilda
    to South Melbourne to pick up her widows pension from the post office because she had no money for the tram fare.

    11th Feb 2016
    2:18pm
    This is ridiculous! Of course younger people have less accrued savings, but they have years of earning left, whereas many older people will never earn again and have to rely on those savings to last through 30 or more years of inflation.

    Young folk today appear to me to be VERY well off compared to what they were when I was young. Sure, housing is a challenge, but only if they do what most do and demand the brand new 4+-bed, 2+bath, rumpus, double garage brick and tile professionally landscaped and beautifully furnished. We started with a 2-bed 30-year old run-down cottage and no furniture. And restaurant dinners and coffee and cake when shopping were out of the question. While housing is expensive today, appliances, furniture, linen, kitchenware, clothing, cars, etc. are a fraction of the cost they were decades ago, relative to wages. Living standards today are very high.

    We didn't have holidays for 40 years. How sad that we now have a little savings nest-egg that MIGHT contain a few more dollars than 30-year-olds have in the bank!!!!
    Rae
    11th Feb 2016
    4:56pm
    It does seem very unfair that the young have so much more than we every had and all those years are worth less than 211000.

    Was it the high interest rates we paid, the unassisted childcare, the low wages, the stagflation that caused us to be so much worse off than today's young families with the McMansion, holidays, huge cars and private schools for their kids?
    Anonymous
    12th Feb 2016
    7:40am
    I'd be delighted to see the young having so much, Rae, and I'm pleased they don't endure the hardship we suffered, but STOP BASHING RETIREES and STOP CUTTING OUR LIFESTYLE.

    When we were young, we DEMANDED that our oldies be treated with respect and we were happy to pay taxes to ensure they were comfortable in retirement and old age. It's disgusting to see the attitude to older Australians today.

    Happily, I know some young folk who are VERY angry at this government for the way it treats their parents. I think Turnbull might get a shock at the next election. Between a large group of retirees who are fed up with his government's disgraceful treatment of retirees, and a lot of young who still have respect for their elders and compassion and decency, there might be enough to counter the votes of the privileged and selfish (let's hope!).

    What really upsets me is to see fools on here who think it's fine to bash the underprivileged ''in the national interest''. What a load of crap! It is NEVER in the ''national interest'' to take from the poor to give to the rich, and the proof of that is apparent to anyone watching the economic trends right now. Everything is going backwards!
    little Jo
    11th Feb 2016
    3:50pm
    Gee I get sick of this kind of crap, lets bash the retiree's because we have no idea how to raise the money we need, and they're easy to pick on, just remember Malcolm how many of us are out there come election time, and please don't tell me the people who did this study are political neutral. Like a lot of people of my generation when we where younger and had a family we didn't have a huge house, didn't have two cars and didn't go on overseas holidays in fact we didn't go on holidays full stop and I shopped at vinnies for our clothes and we didn't go out much at all, so stop whinging about what we have and HANDS OF OUR HARD EARNED SUPER, you weasel politician
    Rae
    11th Feb 2016
    4:26pm
    When did young people start having as much as someone who worked 45 years and has retired. Certainly not when I was young.

    We had a church wedding and a reception in the local hall where everyone brought a plate.
    Camped for the honeymoon.
    Rented a house with a gas hot water heater you had to light for the kitchen and bathroom and an outside toilet. It was very run down and I don't think young people today would live like that.

    Then we bought land kms from anywhere and built a house payday to payday. We had a loan but the credit crisis of 1973/74 caused the bank to pull the loan after the slab was poured so we had to camp out, go to work and save for a kit home that would fit the slab.
    It tok five years to build and fit out the house from savings.

    I sewed all our clothes at night after work and we never ate out, took a holiday or bought take away. Everything went into savings.
    We started with $50.
    My first business was buying clothes at deceased estate sales and onselling at the markets.

    We have spoilt these kids to the point where they think they should have a lifetime of working and saving at the beginning not at the end.
    It is nonsense.
    Besides which the suburbs they would like to live in were never affordable for young people 50 years ago so why would they be affordable now.

    The glut of apartments coming onto the market in the cities may very well crash the market so I advise to keep saving.
    The Central Coast near Sydney also has areas of affordable homes and frequent trains to the city.
    PIXAPD
    11th Feb 2016
    6:25pm
    Saving $600 a month from my aged pension...doing fine thanks, and that's even with renting. I've calculated and factored into saving, that if the ASX crashes and Super funds go broke then there will be plenty of money. Folks seem to ignore that saving must continue after retirement, until death, and saving $600 or more from pension per month is sufficient. It's wisdom, I always prayed and asked the Lord for guidance, even in this matter.
    Keith
    11th Feb 2016
    7:37pm
    That's a very goog idea PIXAPD, I do the same with what is left over from my small Super payment each month.I have always had money taken out of my wage to save each fortnight before I received the balance and used what was left for living expenses, bills and holidays.The amounts taken out over the 46 years I worked provided me with security over the years, and the ability to make cash purchases instead of using credit. When I first started work, I received $26 a week and was able to save $1 per week out of this. It sounds a trivial amount but I say the same principles apply today.

    11th Feb 2016
    8:38pm
    The author of this nonsense can't do math, obviously. Average older workers have worked 45 years to acquire $577,000. That's $12,822 per year. If we assume the ''average'' young person has worked 20 years to accumulate $366,000, they are accumulating at $18,300 per year - 43% faster than their ''oldies'' accumulated.

    Since most of us accumulate more in later years, after children have left home (and often with increasing incomes as we age), it's apparent that the ''average'' young are doing okay by comparison with their parents.

    Young people have unrealistic expectations. It's that simple. Most retirees didn't acquire much at all until after the kids were grown up and working. Then they have a few years to stash some savings for retirement - IF they are lucky. Today's young have 9% superannuation from the day they start work. They live a far more lavish lifestyle. Everything (except housing) is way cheaper relative to wages than it was decades ago. And even housing isn't so expensive when you consider the cheap interest rates. We paid up to 18%!. And if it's so costly, how come they can afford brand new brick and tile 4+ bed, 2+bath, 2+ living rooms, double garage, landscaped, often with a pool, and STILL take their kids to Bali on holidays?

    No. This article is just more of the lies and propaganda peddled by nasty fools who want to find excuses to slug retirees with more cuts to their lifestyle. It's total BS, and it's time it was exposed and STOPPED.
    CindyLou
    11th Feb 2016
    10:34pm
    I fel there is an event of accuracy to this story, however, I think it's not possible to compare today's finncial - social situation to previous generations. House prices are high now, relative to how many years wages are needed to buy now compared to previous generations.

    However, times are different and I agree with posts here that mention young people's desire to have top notch gear is an issue, SOME young people are then slaves to their 'stuff'. trouble is I don't feel this mindset can change, is entrenched and has become the norm.
    CindyLou
    11th Feb 2016
    10:39pm
    Darn auto correct, sorry
    Meant to say that 'I feel there is an element of accuracy'.
    PIXAPD
    11th Feb 2016
    11:18pm
    This is like compare the Meerkat with compare the Market.....way things are going with the ASX there will be NO market to compare
    FM
    12th Feb 2016
    1:18am
    Another thoroughly stupid exercise in elder bashing.
    When did young people ever have more wealth than people who had worked all their lives? They have years of growing income to catch up. Retired people have to live on whatever assets they have for the rest of their lives and it is not a lot. A house is an asset only if your are a disembodied spirit. Who said the financial comfort of baby boomers is on the rise? many have lost half of their retirement superannuation. The level of stress and depression among seniors has increased dramatically in the past three years.This smells of of the elder bashing of leaking tax Daley. Why even bother to comment on rubbish like this
    Fair Go
    2nd Mar 2016
    9:38pm
    I am a retiree and if only I had that amount of money/assets. I have the pension only to live on, very little savings. My 2 sons on the other hand both have houses paid for (not mansions but better than I ever had), they are fortunate to have good jobs which they both worked hard for. Also, we do not live in Sydney. But please, do not lump all retirees together, I know of many many retirees who are continuing to struggle. Trouble is, we have the highest cost of living and the second lowest pension (in the OECD countries). It does not compute, and a lot of my generation had little or no superannuation. What a lot of drivel is written regarding retirees by so called experts. I wonder where they get their information from? So pleeeeeeeese............ stop saying we all have this level of comfort, as I said, if only!


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