Australia’s baby boomers are better prepared financially than first thought, with a new report finding they have high average wealth, historically high levels of home ownership and debt largely under control.
According to the 16th AMP NATSEM Income and Wealth Report, “Baby boomers — doing it for themselves”, there have been big increases in labour force participation rates by older baby boomers to help them fund their forthcoming retirements.
The report also revealed four out of five baby boomers own their homes. The average equity in their homes of $161,000 per person represents around 42 per cent of the baby boomers’ total net wealth, compared with an average superannuation balance of just $65,100, which is 17 per cent of their net wealth.
It found almost three-quarters of all baby boomers carry average debt of $59,000 per household, which in the context of their average net wealth of $381,000 is considered relatively moderate. South Australia and Western Australia have the highest proportion of baby boomer households in debt, while the Australian Capital Territory/Northern Territory and Tasmania have the lowest.
AMP Financial Services managing director Craig Dunn welcomed the report’s findings and said it further supported the view that history has been kind to the baby boomers, with access to affordable housing, free education, often generous welfare benefits and frequently favourable employment markets.
“The events of history continue to favour the baby boomers, with a new retirement income regime coming into place following the Simpler Super reforms announced in the 2006 Federal Budget.
“The baby boomers will be the first to benefit from this sweeping reform agenda, with one of the main features being the ability for Australians aged 60 or more to draw tax-free income from their superannuation from July 1, 2007,” he said.
Offering further comment, NATSEM director and report co-author Professor Ann Harding said: “Despite these positive trends, it is still apparent that many baby boomers are retiring early. For example, by ages 55 to 59, one in every five married males and two in every five unmarried males has already quit the labour force. By age 60 to 64, most women and the majority of unmarried men have retired.”
