The Baby Boomer Bust?

The 21st century will be the century of old age, where declining birth rates meet longer life expectancies. This ageing of the population will affect many areas of the international economy, from consumption and growth to asset valuations. 

The impacts from ageing will likely be most acute in Western Nations, although some developing countries, most notably China, will also be negatively affected.  

Australia is not immune from these demographic headwinds. As shown by the below chart, for the past 25 years, Australia’s total dependency ratio – the ratio of the non-working population, both children and the elderly, to the working age population – has been in a demographic ‘sweet spot’. That is, there has been a high proportion of working age people supporting only a small pool of dependents. This ‘sweet spot’ has come about from two main factors:

  1. The Baby Boomer generation – defined by the Australian Bureau of Statistics (ABS) as those born between 1946 and 1965 and comprising around 25% of Australia’s population – has been at working age; and
  2. Declining birth rates from the mid-1970s.

However, 2011 marks the year when the oldest members of the Baby Boomer generation – those born in 1946 – turns 65 and reaches official retirement age. Accordingly, Australia’s dependency ratio is projected to worsen progressively each year from now on as the Baby Boomers gradually enter retirement.

Australia’s demographics are similar to those of other Western nations, which have also experienced similar demographic ‘sweet spots’ as well as rising dependency ratios going forward (see below chart).

To put the number of retirees in Australia into perspective, consider the number of Australians turning 65 each week between 2000 and 2030:

As you can see, the number of retirees has been on the rise since 2000. And this trend is expected to continue for another 15 years or so.

Accordingly, the proportion of Australia’s population aged 65 or above is projected to rise from around 14% currently to 24% in 2050. Similarly, Australia’s median age is expected to increase from around 38 years of age currently to 43 years in 2050 (see below chart).

An increase in the dependency ratio will, other things equal, lower Australia’s growth potential via reduced expenditure, lower asset valuations, and higher rates of taxation. These impacts are summarised below.

Consumption expenditure:

First, consider the below chart showing how much household income falls once retirement is reached.

As you can see, household income peaks between the ages of 45 and 54, before dropping sharply. A household in retirement earns just over a third of what a 45 to 54 year old household earns.

A similar situation applies with respect to expenditure. Household spending peaks between the ages of 45 and 54, before falling sharply. A household in retirement spends less than half of what a 45 to 54 year-old household does (see below chart). 


Asset values:

An earlier article, Baby Boomers, Retirement and Asset Prices, provides a comprehensive examination of the negative effects that ageing will likely have on Australian asset prices (particularly housing). Here are the key takeaways from that article:

  • Despite representing only 25% of Australia’s population, the Baby Boomers collectively hold 45% of owner-occupied dwellings and 51% of other dwellings (i.e. investment properties and holiday homes). However, since the older Boomer cohort (55-64 year-olds) are relatively small (accounting for 11% of the population), they hold a smaller (20%) share of Australia’s housing assets. By contrast, the younger Boomers (45-54 year-olds) hold 26% of the housing assets, reflecting their larger (14%) share of the population (see below chart).

  • Around 30% of Baby Boomers hold second homes and around 13% have loans over these properties (click to view table).
  • When it comes to financial assets, the Baby Boomers hold 54% of the total (see below chart).
  • Most Baby Boomers are heavily exposed to property and hold relatively little in the way of financial assets – certainly not enough to fund a comfortable retirement. It is, therefore, highly likely that many will look to sell their investment properties/holiday homes and/or downsize in order to free-up the equity in their housing assets to finance retirement. The incentive to sell-out of their properties will likely intensify once the Boomers realise that there is little prospect of continued high capital appreciation.
  • A recent Bank for International Settlements (BIS) Working Paper found that the ageing of the Baby Boomers is projected to reduce Australia’s real house price growth by around 30% in real terms over the next 40 years compared to neutral demographics (see below chart). The BIS also expects ageing to have a similar impact on the value of financial assets.

Again, readers seeking to gain a better understanding of the Baby Boomer retirement’s impact on asset prices are encouraged to read my earlier detailed examination.

Government revenue and taxation:

The 2010 Intergenerational Report (IGR) had the following to say about the impact of ageing on Government finances:

Population ageing will create pressure for increased spending, particularly in the demographically sensitive areas of age related programs and health. Health costs will also escalate as a result of technological enhancements and rising demand for better quality health services. Population ageing, by reducing the proportion of working age people in the population and hence potential economic growth rates, will also reduce Australia’s capacity to fund these spending pressures.

Unless action is taken to increase the growth potential of the economy and ensure spending is sustainable, spending will exceed revenue and result in a fiscal gap of 2¾ per cent of GDP by 2049–50.

However, the IGR possibly underestimated the fiscal impact of ageing, since it ignored the impact of declining property valuations on state government budgets. As shown by the below HIA chart, Australia’s state governments have become increasingly reliant on property taxes. And any decline in valuations brought about from the retirement of the Baby Boomers would clearly have a detrimental impact on state finances.     

Clearly, any loss of revenue arising from the ageing of the population will need to be met with 1) reduced government outlays; 2) an increased tax burden on younger generations; or 3) a combination of both.

Demographic headwinds are the new normal:

For the past 30 years, the Australian economy has been powered by the Baby Boomers, whose entry into the workforce en masse in the 1980s saw Australia’s dependency ratio fall to all time lows. This demographic ‘sweet spot’, whereby Australia’s dependency ratio was at its lowest ever level, lasted for 25 years from 1985 to 2010. During this period, Australia’s economy benefited enormously from the Boomer’s productive capacity, consumption spending, and taxation receipts, which peaked after the 1990s as they reached peak earning/spending age (45 to 55 years of age).

Asset values, too, were pushed-up by the Baby Boomers as they accumulated vast amounts of housing and financial assets with the aim of funding their retirements.

From 2011 onwards, however, Australia’s economy will face significant demographic headwinds as the Baby Boomers gradually: enter retirement; cut back on spending; draw-down on assets; cease paying tax; and receive increasing levels of health care and social security, funded by increasing taxes on the younger generations.

These factors will likely significantly lower Australia’s growth potential and asset valuations going forward.

Cheers Leith

[email protected]

Unconventional Economist
Latest posts by Unconventional Economist (see all)


  1. It would be interesting if you researched the proportion of medical expenses spent on the last months of peoples lives.

    I can foresee a country crippled by an ageing population (who once would on average live only a few years after, now living 15-20 years into retirement) cutting the experimental & expensive health care that costs hundreds of thousands to keep somebody going another few months with terminal conditions.

    • Are you proposing we let your/my father die?

      My dad was terminal at 78 with pneumonia and was saved and I enjoy a chat now and some guidance at 88.

      When we start letting our young and old die because we need to save money so we can do an aeromedical airborne rescue on the central coast due to another Sat night ‘brawl/glassing’, it is time.

      The time I pull my Canadian and Euro passport out and give up on this my home country.

      Protect the 100% inflated property bubble at all costs Smithers (for you mathematically challenged, $250K to $500K is 100% gain, 500 to 250 is a 50% fall)

      • That’s my plan. I can’t help but think that anyone young who has good education / skills will just up and leave this country. For me personally Singapore is probably not a long term option (but I won’t knock it until I try it!) but offers ~10% tax, great experience, and will double my take home pay and the amount I can save (even after SG living expenses).

        I get the feeling that if you’re not already a ‘have’ in this country then you’re lined up to be a ‘have not’.

        I also can’t help thinking that once people start to leave the government will do something nasty with tax laws etc. I can see that there’s no future here, so I am getting out as soon as I can.

        • I can see that there’s no future here, so I am getting out as soon as I can! – interesting as many others around the world are heading for Australia for the same reason, Ireland is bust and I have three close family and friends that have moved back to Australia from there inthe past month!

      • No think critically. Obviously there is already a line there – they don’t spend $300,000 on experimental medication for every Cancer patient now to keep them going another month.

        These cost vs reward arguments are already present, for example not every useful drug is on the PBS due to very high costs. Some wealthy people choose to pay for them out of pocket anyway.

        What I’m saying is that in an aging population supported by a less productive, smaller workforce, the line may move left even more. Palliative care treatment will be scrutinized even more & decisions will be made because even though we currently feel wealthy, this feeling of unlimited government spending will not last forever and tough decisions will have to be made.

    • I’ve heard in loose conversation within the medical fraternity that over 80% of the Medicare levy is spent on people in their last 6 months of living – what a waste of money in my view, yes – a harsh comment, but none the less a debate just waiting to happen.


  2. Dunno about the cost of aging but what about the horrendous cost of growing children until they reach the point they become worth anything to the economy.
    I think they cripple our economy for at least their first 20 years of their life.

    • Kids cripple the economy???? Are you kidding. I can think of many factors that adversely impact the economy…and kids are not one of them.

      Kids are a joy, lighten the spirit and worthy every penny, real and imagined.

      Grow up.

    • Upon reflection, I realise you must be joking!

      Kids cripple the economy: pharmaceutical contraception; physical contraceptives; gynecologists; obstetricians; anesthetists; midwives; nurses; clinic staff; pediatricians; baby goods manufacturers; formula manufacturers; baby apparel; three year old kindy teachers; kindergarten and preschool teachers; primary teachers; educational material publishers; child psychologists; playground designers; tv merchandisers; high school teachers; junior fashion suppliers; fast food companies; vast sectors of the public service; animators; mobile phone companies; high school teachers; tutors; kumon; music schools; dance classes; martial arts classes; amusement parks; department stores at Christmas and Easter; how to parent publishers; pet stores; Disney movies; Harry Potter; and so on and on and on.

      Kids – a real drag on the economy.

    • I spend $15K-25K ayear on my kids education et al so they don’t end up like you. So far so good.

      • BTW Keith, as a non centrelink recipient isn’t the 15-25 at Uni college level and school level actually INJECTING discretionary income into a sector of the economy?

  3. Those in favour of a ‘big Australia’ frequently spruik high levels of immigration as the panacea for our ageing problem. The last time I checked the median age of immigrants was 34 years and of Australians 36.9 years, so high immigration would seem unlikely to have the required result. Perhaps there is a demographer out there who would care to comment?

    • The aim isn’t to lower the average age, but to decrease the dependency ratio. So any increase in people under 65 will help with that. In addition, many migrants only stay for a few years before heading back.

      • “In addition, many migrants only stay for a few years before heading back.” with the money earned in Australia, including super

        • From a narrow economic perspective, temporary skilled visas provide the best outcome since Australia benefits from the workers’ productive capacity without paying for many of the downside costs, such as education and old age pensions/health care.

  4. Leith,

    You might find this interesting,

    “Demographic Change and Asset Prices, in Demography and Financial Markets, Reserve Bank of Australia”, By Robin J. Brooks (2006)

    Note: Dose not look at house prices.

    “Empirical evidence does not point to a strong historical link between demographics and financial markets”

    “While the existing literature has found that the relative importance of middle-aged cohorts tends to be associated with relatively high
    real stock and bond prices, this paper shows that this relationship does not hold for countries with strong equity market participation among households, such as Australia, Canada, New Zealand, the UK and the US. In these countries, higher real financial asset prices tend to be associated with a large share of the population in the old tail of the age distribution, consistent with survey evidence from the US that shows that households build up financial wealth well into old age and then do little to run it down in retirement. Taken at face value, this suggests that real financial asset prices in these countries will actually rise as the population continues to age”
    “Nonetheless, this finding underscores that historical evidence provides
    little support for the hypothesis that asset prices and returns will fall abruptly when the baby boomers retire”

    • I’m rolling on the floor laughing at that;

      “Taken at face value, this suggests that real financial asset prices in these countries will actually rise as the population continues to age”

      Just as scarcity stimulates people into action to buy, and as Newton’s second law of Physics states (equal and opposite force) – be assured that the bust will come and houses will be sold of wholesale in the rush to the exits (businesses as well – the majority of small business owners think their business has their super tied up in the sale – that makes me laugh even more, it won’t happen, the majority will walk away with nothing as demand for their goods and services dries up … it is happening now).

      The momentum created from the ageing baby boomer’s behaviour (as the reality sets in) will see all assets re-rated in the next few years (and I think it will accelerate when people feel their wealth sifting through their hands), hence my view that most of the re-rating will occur before 2015. They will sell their second homes on masse and this will accelerate – they will spend less as they realise the situation they are in – creating unemployment which in turn will decrease GDP – for at least 10 to 12 years when the Y Gen start their peak spending (1975 plus 47/48).

      All assets except cash will be smashed in the process – clear as day to me. The stockmarket rewards company share prices based on their forecasted earnings and importantly their growth in earnings – the PEG ratio … history tells us that when periods of contraction turn up, PE ratios (performance earnings)plummet to an average of 5. Today they are 14 (I think) – yes a fall of 65% in the stock market coming.

      Governments will be voted in and out by the Baby Boomers for the next 15 years – there is enough of them to do this and in the process they will get whatever they want to ensure a comfortable and long retirement (the luckiest group of people to date in my view – had it bloody easy) … this will create unprecedented unrest as the younger generation revolt! Mmm, that sounds familiar.

      I’m a Liberal voter, however for the next 10 to 15 years I don’t think they have a clue on how to handle this period of politics. Labor will hold power for a long time as the Government will have to compensate for the imbalances.

      By the way, I am a Baby Boomer.


      • Phil,
        You are right on the money. I too am a baby boomer (1951 Vintage)and have read well. Living life and with a keen interest in what my young adult children are doing, and I advise them not to buy property now, just wait…..We differ in that I am a Labor voter, but agree that in the end, neither party will be able to control market emotions. Greed and Fear….Fear being most powerful.

      • gen Y is not generation of spenders, they value free time, not the useless goods.
        When baby boomer has excess of money he spends on things he does not need, when gen Y person has excess money he goes part-time

      • Bang! Boing! POP! Linear Momentum is about to collide with the aging force of Mother Nature.

        “All assets except cash will be smashed in the process – clear as day to me”

        Not clear as day were I am sitting, there will always be asset classes that return over the risk free rate.

        Property is certainly not one of them, it has had it’s day, the game is in “extra time” and boy is it going to be hammered.

        Anyone wants to move to the Gold Coast, Sunshine coast, Port Douglas, Nelson Bay etc…?

        Note: I am tail end gen X property owner. Gen X common end date is 1981.

        I have read vast differences on the affect of baby boomers retiring have on GDP. Who knows! I am no economist.

        “Governments will be voted in and out by the Baby Boomers for the next 15 years – there is enough of them to do this and in the process they will get whatever they want to ensure a comfortable and long retirement”

        If I am not mistaken the majority of Baby Boomers have little to no money for retirement.(~$50,000 liquid + equity in their home). How long will that last?
        They might “cry foul” ultimately they will take what they are given.

        I can see, the federal govt put it hand’s into a reverse mortgage system in the not to distant future.

        Also, I believe the NBN is completely underestimated in the affect it will have in minimizing the cost(s), productive members of society will have to bear in the not to distant future.

        Amazed people do not comment more about the profound affect fibre-to-the-household will have on Australia’s economy and the govt'(s) delivery of key services.

        I know the NBN is a very politically sensitive subject: Hell! I even voted Labor for the first time on this one policy.

        • “I know the NBN is a very politically sensitive subject: Hell! I even voted Labor for the first time on this one policy.”

          Never mind – you’ll know better next time.

  5. Keith is a boomer? A 10% haircut to the portfolio OK?

    If property values fall by 5%pa a quick round of year 12 logarithms says its 13.5 years to halving in value raw.

    Allowing for 3% inflation 8 years to 50% GONE (5% annual haircut).

  6. Leith

    … as I have posted before, the period of growth is as a result of people born 1933 to 1962 – this is the group of people to watch. From 1933, birth rates increased at 45-55 degrees for 30 years unabated in most of the western world (USA and AUS in particular).

    Demand for goods and services peaked some 45 years later (for people born in the 30’s) to 47/48 years later for those born closer to 1962, who left having families a little later. Then the pill was introduced and we had the “free love” period – which of course stopped the baby boomer in its tracks.

    So overall GDP increased and created the boom of the last 30 years, 1980 to 2010 as this group of people went through peak spending.

    The 1946-1964 period is but a small part of the real “boomer” group.

    People born in 1933 are now 77 years of age, well into retirement, the majority dependent on the Government pension, the numbers in this situation increasing by the day and creating a major drag on the public purse. This will go on for 30 years before it gets better (to be fair, we might still be a year or two away from the direct costs spiraling up – probably 80 years of age is when people become “totally hooked” (or peak dependency) on the Government for Medical care, noting their will be a 30 year period of increasing costs for the younger generations to provide through their tax as the rest of this group make their way to 80! Regrattably with advancements in keeping people alive physically, most will hang on for another 4 or 5 years (that’s a different discussion, noting that advances with mental diseases has made little progress …).

    A massive period of adjustment is just around the corner – cash looks good to me!


  7. Great graphs Leith.

    My favourite concern in this area is the deleveraging of the BB generation due to loss of negative gearing benefits once they start enjoying ‘Tax Free’ status.

    All of a sudden the small losses made on rental properties will become large ones, and equities will start to look a lot more enticing!

    • Agreed TimF. I discussed the negative gearing aspect in my previous detailed examination. In a nutshell, the Boomers have been the main drivers of negatively geared property investment as they attempted to accumulate assets to fund their retirements. But once they stop working, they can no longer negatively gear, thus removing a key demand driver of housing prices. Add in the fact that residential property provides such poor yields, and there is a risk that the Boomers will dump their property investments en masse in favour of higher yielding investments. Obviously, any significant sell-off would put downward pressure on housing values.

  8. We have done little to reverse the genocide birthrates in the middle-class world, why do your projections show a leveling-off of childbirth?

    Frankly, we are still not producing enough children to replace the adults, and it’s not changing by enough.

    THe cause is having middle-class and feminism. Feminism means men don’t want to become fathers anymore (Australia has the highest rates of vasectomy in the world) because they know that fatherhood and divorce is a world of pain for them and their potential children.

    We also need to stop handing out mean-tested money to baby-factories and instead make children reduce your tax, so professionals can afford the kids they want.

    How about income splitting between dad, mum and the kids. Divide total family income by total family members and each pays tax on the reduced amount?

    Or a simple 10% off your tax per kid?

    We have to stop suiciding.

    • PartTime. They aren’t my projections. They come from the United Nations. I also do not agree with your contention that we need to keep populating or perish. The human race cannot continue to breed like rabbits and expect the world’s finite resources to provide us with continued high standard of living. At some point, the world needs to stabilise its population. We cannot have infinite growth in a finite world.

      • Leith said “This will go on for 30 years before it gets better”
        Why will it get better?
        Around the developed world there is no indication that fertility will ever return to replacement levels. (Aust is amongst the highest at 1.8-something per two adults, Europe is still declining)

        “They come from the United Nations.” I’m not saying they are yours, just questioning the assumptions. I see no evidence that the developed world will not continue declining and shrinking decde-after-decade till there are none left. Or at least insufficient people to maintain our economies and national boundaries.

        “I also do not agree with your contention that we need to keep populating or perish. The human race cannot continue to breed like rabbits and expect the world’s finite resources to provide us with continued high standard of living.” Very true. But don’t fall into the PC trap of equating a nth African with a westerner or Japanese.

        We’ve got low fertility, they’ve got very high fertility (in historical terms). Much of Central Africa has 8 children per woman (not per family).

        You are right, it is impossible for the world to support that sort of population growth (even perhaps our current populations). And even more impossible to see our declining populations providing the aid money to support their booming populations.

        Whether it is civil war and genocide (e.g. Rwanda) or an Islamic ideology unifying these populations… (beginnings from the present islamic terrorism) the result is poverty and war.

        We have to save the planet, we have to save people from war and civil strife. We need to do something about the unbalanced population growth.

    • Australia’s fertility rate is quite high by international standards, at just below the replacement rate: 1.96 children per woman in 2008 and 1.9 in 2009.

      Developed nations with the highest fertility rates are more likely to have structures which allow women and men to combine parenting and work through maternity and paternity leave, readily available childcare and flexible working conditions. Developed nations with the lowest fertility rates, such as Japan and Italy, tend to cling to the dad at work, mum at home model – thus smart, educated women lose out if they choose to have kids. So if anything, feminism has arrested a decline in fertility rates!

  9. I’m with Keith MacLennan – so long as you get irony.

    This ‘aging problem’ is only fussed about by people who are fixated on GDP and its growth – i.e. politicians and the stupider economists.

    Who cares if your parents will require a bit more effort to care for? You’ll be twice as rich by then – so the GDP fixaters claim. But the world will go pear shaped in much more dramatic ways over the next decade or two.

    Leith, I like your quantitative, informative approach, but this is one topic on which to put all the graphs aside and think about people. A big ask in economics, I know, but we don’t all have to be like Peter Costello.

    • Geoff. Population ageing isn’t good or bad, it’s just an unavoidable fact of life. We can try to delay it via immigration, but we cannot avoid it.

      Nowhere in my article have I made value judgements or engaged in intergenerational warfare. I have merely attempted to present the facts as I see them so that readers can position themselves and their portfolios accordingly.

      • Leith, sorry if my point wasn’t clear. I’m not implying judgements about generations either.

        I simply think we, as a community, need to do what is required, and if that means a slowing or dip in the holy GDP so be it. The point of an economy is to support people and society, not vice versa. I took Keith MacLennan’s comment to imply that you simply do what needs to be done, for your children or for your ageing parents.

        The concern of many economists seems to be that the ageing could affect growth, which means growth of the GDP. And of course politicians are terrified of a slowing GDP. Well the GDP is a fundamentally flawed measure of economic “progress”, we should be focussing on well being, and in fact continued growth of GDP is wrecking the planet. I speak as a scientist who has looked quite thoroughly into these topics, not as the caricatured greenie tree hugger.

        By all means look at the implications of the ageing population, but don’t imply it’s a disaster or a crisis, because it’s not. And certainly don’t start trying to artificially boost population with yet more immigration, and only make our real problems much worse.

  10. Almost on topic….

    In the 2009 budget, the Government laid the groundwork for raising the pensionable to 67 years, starting in 2017.

    In the same budget they tightened the Age Pension income test making it harder to qualify for the pension.

    So retirement may be more difficult than many people think if they they are counting on welfare support.

  11. Hi Leith,

    Enjoying your blog. Baby boomers do indeed appear to have invested substantially in real estate to fund their retirement, but isn’t it possible that their aim might be to keep the assets and live off the income stream (rent)? Obviously if they’re negatively geared or only slightly positively geared they’re better off selling up; but if they’ve had their investment property(s) for 5, 10 or more years they’ll either have paid out the mortgage or there’s plenty of rent money left over after expenses are paid.

    • Hi Marcia. I’m sure some Boomers will hold on if they own their properties free and clear. However, with residential property paying such terrible yields – around 3% after costs – many will likely place their capital into higher yielding investments, such as bank term deposits, which currently pay around twice the yield with less hassle. Further, the incentive to sell-up will intensify if the expectation of continued solid capital gains disappears.

      Once someone enters retirement, a steady income becomes more important than potential capital gains.

  12. Can I ask again, why is this upper end dependency a figure beyond reproach?

    The Prussian state, (or Second Reich), not sure which, introduced government supported general aged pensions a little over 120 years ago, it’s a prescriptive law, not a natural law.

    When it was introduced to Australia with a retirement age of 60, average life expectancy for men was 59, women was 62. Now we’ve had this retirement age recalibrated to 65, however men live to 79 and women live to 83.

    The issue isn’t about the fairness of funding retirees, but what proportion of the population should be in this upper end of dependency.

    Extending the qualification age, or it you care for to complexity, only allowing say the oldest 5% of the population to be retired, is a fairer answer.

    Even If a whole bunch of early boomers evacuate the housing market with equity in tact, their retirement still means a lump sum, or excess cash, chasing fewer goods, as they aren’t delivering product to market anymore.

  13. I suspect the “demographic demon” is going to be much less of a problem than many people expect. For a start, at the moment we have around 25% unemployment among 15-24 year olds. Increased needs for caring due to an aging population will help take care of that problem. Increasing retention rates for year 12 and higher education means more demand for teachers and university staff.

    Another issue is that we live in a global economy. While countries like China and India continue to grow rapidly, we can continue to ride on their coat tails to some extent. Even if we can only grow real GDP per capita by 2% a year, by 2050 we will be more than twice as wealthy as we are now. That should make looking after the elderly relatively painless.

  14. Wise words Alex. Still, knowing the demographics gives us an accurate picture. That then tells us what we have to adjust to, and then people will do thier best to do so. Age is not so much of a problem as health. The other adjustrment is attitude. If work is interesting or not physically punishing more people will choose to continue. There have been policy changes reflecting this by allowing pre retirement pension income from super funds, a bonus for delaying aged pension commencement and so on. All impediments to continuing some work should be removed. There are issues around worker insurance, awards, safety, training, flexibility and so on. As we age we may be smarter and wiser and very useful , but we need time to go to the physio or dentist etc, and to have the occassional bad day. This can all be accommodated with a little thought. My work is financial planning and at 65 it is mostly for my peers. Even if someone has been earning $80,000 pre retirement their funds can last a great deal longer with a $20,000 part time role, or less.
    Interestingly we see children as needing supervision too, but we are overlooking the fact that many fit and able people over 65 are capable of caring for their grandchildren while the son or daughter earns a living.
    Our ageing is an important issue. Being aware of our demographic sitruation gives us time to discuss it, and make many adaptations.
    But certainly , charging on as if it was all going to keep being like it has been since the 60’s would be folly. The boomers burst the seams of the maternity wards, the kindergartens, the schools, the universities and then the mortgage market, and then paid off thier houses and created liquidity and wealth while reaching thier peak productivity, and we will do the same bulging on the down slope. Adapt we must.

  15. Hi Unconventional Economist.

    How high do you think rental yeilds will go (as prices fall) before it stabilises. I know a house in brisbane (non flood area) going for 430k that rents for 520 a week gross. (6.28%)Any Takers??

    • Carlos,

      6.28% before expenses is a horrible return you can do better in the bank with no expenses and currently no risk thanks to the government gaurantee. These yields should be closer to 9%. Yes that means 300k house at 520 a week.

  16. Amazing to read this stuff. So the guy above says how about we start paying more to support more kids. And that is to avoid paying more to the pensioners. Wait a minute, and what is the differece? In particular, taking into consideration, that keeping pumping out more kids and growing our populations past 7 billions will cause all sorts of trouble – no more oil, fresh water, fish stocks in the oceans already almost depleted and so on and on and on.