Australia's wealth gap punishes younger adults

Those aged 25 to 34 added just $67,620 in household wealth over the past 2 years.

The wealth and well-being gap between older and younger Australians is widening and could soon reach record levels.

The latest Intergenerational Equity Index shows that whilst all age groups are better off than they were in 2000, pandemic-era equity gains are rapidly unwinding, according to a report by the Actuaries Institute.

Over the past two years, Australians aged 65 to 74 gained an average of $258,750 (A$375,000) in household wealth, and those aged 45 to 54 gained $231,840 (A$336,000).

In contrast, young adults aged 25 to 34 accumulated just $67,620 (A$98,000), missing out on property and stock market gains due to lower home-ownership rates and smaller superannuation balances.

Government policy is the leading driver of this divide, with age-related spending gaps more than doubling in favour of older generations.

Younger Australians also face a heavier tax burden to repay national debt; a 30-year-old today faces a net debt-to-GDP ratio of 20%, compared to just 2% for 50-year-olds when they were the same age.

Whilst younger people face rising rental costs, higher anxiety levels, and a recent 70% spike in theft in Victoria, the report highlights some positive trends.

Unemployment has remained at its lowest level this century since 2022, real household incomes have risen, and the gender pay gap has fallen to a record low, driven by gains for young professionals.

The Actuaries Institute warned that current tax, housing, and retirement policies heavily favour existing asset holders and called for targeted policy changes to address the growing imbalance.

($1.00 = A$1.44)