Generation Xers – already feeling the strain from huge increases in housing and tertiary education costs, job insecurity and changes to welfare – can look forward to further hardship as they become entrusted with supporting their under-funded Baby Boomer counterparts in retirement.
AMPFinancial Services managing director Craig Dunn – commenting on research conducted for AMP by the National Centre for Social and Economic Modelling (NATSEM) – argues as Baby Boomers haven’t done enough to provide for their own retirement, Generation X will be expected to make up some of the funding shortfall.
“This report shows younger Australians simply can’t afford to carry the tax burden of paying full price for millions of Baby Boomers who haven’t saved enough for their retirement. It’s not fair,” Dunn says.
“Planning, building and protecting wealth will be very important to Generation X as the increasing cost of living, especially housing, directly affects their total wealth. They will need a comprehensive plan of attack to provide them with the sort of life-style that was perhaps more easily accessible to the Baby Boomers.”
The report highlighted the pressure faced by Gen Xers with the home ownership rates of those aged between 25 and 39 falling from 64 to 54 per cent since 1989.
Other findings revealed Gen Xers to have far less of the wealth pie than Baby Boomers had at the same age. In 1986, 25 to 39 year olds held 27 per cent of the total household wealth pie – a figure that has dwindled to 17 per cent.
The report also found a large slump in couples starting a family – with many women pushing the decision to have children out by five to 10 years and contradicting the popular belief that many women are opting to have children and become ‘working supermums’.
NATSEM director and co-author of the research, Ann Harding, says the impact of deferred home ownership will significantly impact on the ability of Gen Xers to accumulate wealth.
“The proportion of 25 to 39 year olds staying in the family home has increased since 1989, with most of them holding down full-time jobs. On the other hand, those who have moved out have increasingly chosen to rent rather than buy,” Harding says.
Dunn also reaffirms industry consensus regarding the retirement savings shortfall and the pressing need to act.
“The retirement savings gap for Baby Boomers remains one of Australia’s most pressing public policy issues. According toIFSAresearch this gap is likely to blow out to $600 billion over the next 40 years unless we do something about it now. If we are going to close this gap we have to work quickly,” he says.
