Retired Australians are creaming it

The next time you hear a seniors’ group demand an increase in the aged pension and other subsidies, consider the latest Melbourne Institute’s Household, Income and Labour Dynamics in Australia (HILDA) report, which was released last week.

This report showed that Australians aged 65-plus enjoyed by far the biggest increase in wealth between 2002 and 2018:

Prior to 2010, the median wealth of people aged 65 to 74 was less than that of those aged 45 to 54, but by 2010 the median wealth of the 65 to 74 age group had overtaken the median wealth of those aged 45 to 54. This reflects the very strong growth in median wealth between 2002 and 2018 for the 65 to 74 age group, with the median increasing by 98.1%. Growth was also strong for the oldest age group, increasing by 83.4% between 2002 and 2018.

In a similar vein, Australians aged over 65 have enjoyed far bigger growth in incomes compared against non-retirees. They have also maintained high home ownership rates (80.8%) while home ownership rates among non-retired people has plummeted by 6%:

The Retirement Income Review, released on Friday, also noted that age pensioners have enjoyed big financial gains over the past decade:

The Age Pension has grown faster than both wages and prices since 2009. The maximum rate compares favourably internationally and is above available absolute poverty benchmarks. Rates of financial stress for people with few other means drop substantially when entering retirement. Older Australians:

– Generally have lower levels of financial stress compared to the working-age population.

– In lower-income households, experience improved living standards on entering retirement as the Age Pension is higher than some working-age welfare payments and income levels.

– Have experienced reduced income poverty rates over the past decade, especially singles and renters, although poverty rates remain elevated for some retirees who rent.

– Receive significant support from non-income sources. Governments meet many of the health and aged care needs of older Australians. In 2015-16, households aged 65 and over accessed government services worth more than the Age Pension, with this value growing faster for retirees than any other age group. Reduced housing costs through high home ownership rates and higher levels of assets than working-age households are also significant forms of support for most retirees.

While older renters and those on the dole are undoubtedly doing it tough (as are all unemployed people), older Australians as a whole have enjoyed far better economic outcomes than non-retired people.

Unconventional Economist

Comments

  1. Wondering if all the retirement perks make up for the loss in income for the current crop of 50+ year olds who have gotten dumped from jobs and continue to be discriminated. I expect there are a large number of older workers who may not work again.

    • The Traveling Wilbur

      Wondering if all the retirement perks that result from policies that keep getting the LNP reelected make up for the resulting loss in tax base revenue and dumped jobs in a labour market that continues to be descimated. I expect there are a large number of workers who may not work again.

      • The government could use that extra tax revenue to provide an employer subsidy to only incentives the hiring of younger workers thereby providing not only a further impediment to 50+ workers finding a new job but encouraging currently employed older workers to be thrown on to the scrap heap and be replaced by younger workers.

        • The Traveling Wilbur

          The government could use the extra tax …

          Nah. I can’t even get past that “extra” word.
          Let me know when you’re finished feeding your unicorns.

    • My partner had dinner last week with a friend. Friend’s husband is early 50s and worked for a salary packaging outfit doing car leases etc, but got laid off a few months ago. They are on a mortgage deferral because they can’t cover it on one income. Friend says hubby must find some sort of work…anything….before the deferral ends.

      I suspect there are a lot of people in this situation, and hubby is going to end up stacking shelve or similar.

      • Genuinely sad for this person, the hopelessness and sense of pending doom and financial ruin is very real in this circumstance.

        Not to mention the psychological dissonance of knowing peers in this aged cohort who have had a lifetime of cushy jobs, still getting paid so many multiples more than welfare for seemingly little more productive contribution than welfare. I have been there. It is a bitter pill to swallow.

        In addition, for older people to now be subject to the new working conditions and pay rates of the next generation will be an Australia to which they are very unaccustomed.

        • Yeah, me too. I’m 58 and in a pretty niche field. If I got laid off (which is unlikely, thankfully) I doubt I’d work again.

          Speaking of layoffs…more anecdotes…

          Another friend of my partner who I met a few weeks ago worked fairly high up in the HR department at a Large University. Once the Covid hassles struck, the executive started laying people off left right and centre. No executives of course, just the workers. Anyway, this person spent most of the last 6 months laying people off across the entire organisation. Then, to her shock and horror, when there were no more people to lay off, she was laid off. She doesn’t think her chances of finding work in the near term are good, given all the competition.

          And a different friend of the missus worked at a different Uni for nearly 20 years. Covid came along and she was laid off a few months ago with essentially no benefits. Nothing. She’d been on a variety of contracts over the years, and she’d recently signed up to a new one which apparently resulted in her being treated as a new employee when layoff time came, ignoring the previous 20 years of loyal service. Her complaints and requests for a bit of natural justice have fallen on deaf ears so far.

          It does look like the people running our tertiary institutions are a bunch of greedy sociopaths, doesn’t it?

        • ‘In addition, for older people to now be subject to the new working conditions and pay rates of the next generation will be an Australia to which they are very unaccustomed.’
          Yeah well maybe they shouldn’t have on average ignored those new conditions that young Australians deal with that they didn’t have to become ‘accustomed’ to.

          • I think the lesson to learn here is that injustice anywhere is a threat to justice everywhere

            Whatever affects one directly affects all indirectly.

            What goes around comes around.

  2. Wait until the inevitable market correction comes – then it will be jam and bread for all of us…

      • boomengineeringMEMBER

        In my day it was bread and dripping. If you don’t know what dripping is, well, you don’t know.
        Not directed at you Mining (too much respect).

        • Right up there with the days of tongue sandwiches, and tripe & onions.
          And given that most of this ‘wealth’ is phantom figures on a spreadsheet, those days could come again.
          (From Today’s Links – Hussmann’s article “Economic and Stock market crash: Professor warns of 66% plunge, negative returns in stock market”)

          • chuckmuscleMEMBER

            Hussman has been warning about a correction for 5 or 6 years. What’s more amazing is that the guy is still in business and writing the same stuff every week. Stunning, truly stunning.

          • My grandmother’s friend loved tongue sandwiches and would always trot out the same line: “Now here’s a tongue that licked many an a r s e and never told a lie!”

          • Yes ma’am SPAM
            Coles & Woolies know what’s coming. They’ve been special ing Spam last 18 months….getting folk used to seeing it. Next Master Vhef will do cross promo.
            101 ways with spam.

        • Mining BoganMEMBER

          Exactly! Bread and jam seems rather fancy. Next thing they’ll be wanting bubbles in their water.

  3. Time to turn the pension into a reverse HECS type scheme?

    Millionaire pensioner heirs should pay back the cost of their pension and healthcare from their million dollar estate when they die.

    • chuckmuscleMEMBER

      Yep. Think they should also have to register other assets and cash, accounting for them every year. Could easily imagine large “gifts” occurring to their pre-retirement children. Unfortunately this will hit the upper-middle class only, which is good, but not broad enough.

      Nonetheless, unless something is done about trust and estate law globally, the real uber-wealthy bandits will continue to pass along wealth untouched. While most of the time inherited wealth dissipates after 3 or so generations, which is not a bad thing as it means it is being spent (via arm or nose unfortunately) certain structures allow inheritance to last virtually forever which is a bad thing because it just keeps accumulating wealth and not being spent – see Europe for examples.

      Sadly, don’t expect any of this to occur.

      • boomengineeringMEMBER

        They already have to register all assets and cash and if YOU give anyone a gift it attracts gift duty. All this can be cross checked via gov”t & bank records and computers.

          • boomengineeringMEMBER

            Chuck,
            The amount of paperwork required for the pension stopped my 95yo mate from going ahead with it not long ago. Was a carpenter in his youth driving nails into hardwood under the WA Sun. Never had any gov’t handouts and still paying tax.

      • There are no specific gift taxes/duties.
        If a person has given a gift within 5 years of claiming a pension, the gift is included in assessable assets.
        If a person with a SMSF dies with assets remaining, the part of the fund that has been contributed as tax deducted is liable to a tax of I think 10 %. This has easily been circumvented by withdrawing and recontributing if under 65, before the max contribution level was set ($300K).
        Otherwise, have your executor or close family organised to withdraw all your super before you die. No tax.

        No gift taxes/estate duties is a very big benefit to the top 10%. Our IPA/LNP thieves argue that the little tax payer is affected by these types of taxes, in reality the upper 10% make oout like thieves.

        Likewise, all trust/money sent off shore should be included in personal assets. Trusts are only for tax minimisation and hiding assets from in-laws.

        • boomengineeringMEMBER

          Thanks for clearing up
          . Trusts have come under much more scrutiny of late as the taxman tentacles need to reach further into the crevices.

  4. Jumping jack flash

    2002 to 2012? Biggest run-up of debt in all history?
    Join the dots.

    These guys had no super but could also afford a house in its entirety without the need for enormous quantities of debt. Sure it was hard and all of that other stuff, but nothing compares to the luxury of being able to save up the whole price of a house out of a reasonable percentage of a median wage over a reasonable amount of time.

    Something that will probably never happen again ever.

    • More than that they are the generation that survived after a World War with little debt (household) at the start to show for it in a country with ample amounts of land (even around Sydney). In the long term as long as population is increasing at a exponential rate (i.e. a percentage every year) they stand to benefit massively. They got into the “ponzi scheme” or rather the debt cycle early and enjoyed most technological progress without most of its downsides as early adopters – was a great time to be born (1950’s – 1980’s). Been going down hill since.

      • The Traveling Wilbur

        So what you’re saying is, is if you know how to set a timer record on a VCR you’re scum then?

        • Not scum at all; just lucky. Life isn’t fair and where and when you were born is probably the biggest factor in your quality of life. For better or worse that’s just the way it is.

          Its sadly why older people don’t get as much sympathy from the young however I’ve noticed today. Given the more casualised workforce, higher house prices, and generally more globalised competition with most technology developments favoring corporations rather than the average household many I’ve heard look at that time period with envy. I wouldn’t be surprised if those years will be looked back in economic history as the “golden times”. Low debt, growing economy, and large technological change benefiting the average joe with a lot less inequality and more local opportunities.

      • Jumping jack flash

        Having little debt was the key to making this quasi-economy based on debt expansion work. Now that we are very close to debt saturation there are many problems. Not insurmountable problems by any means, but they will require “unconventional” solutions.

  5. Notice how whenever there’s a reference to data that show how Australia’s older generation has shamelessly torn up the social contract and pillaged the nation’s future, there’s a reflex to say something like, Many pensioners are undoubtedly doing it really tough, we must acknowledge? Why are old poor people more deserving or pitiable than young poor people, who generally attract nothing but contempt due to insufficient go-having? FFS, these oldies have displayed insufficient go-havingness for their entire lives, if that’s the measure.

    • boomengineeringMEMBER

      Too true McPaddy,
      The 10yo kids today will be saying the same iabout the generation before them n a few years unless the correction we are awaiting finally comes.

    • Young people are voting to destroy their futures far more than older people are.

      Start looking at this differently, you’re on your way to losing the whole lot.

      Young Australians are being scammed, that’s for sure, but it’s not by the oldies. It’s far more that Labor are now the same as LNP.

      Younger voters OUTNUMBER older voters, and young voters typically vote big Australia Labor and Greens. There’s your problem.

      • Labor have always been the same as the libs, or near enough to it.
        The labor and liberal party policies of the 1970’s are both far closer to each other than to their own parties policies of today.
        But keep looking through those rose coloured glasses…

        • One key policy now makes it a far bigger issue, and because of it, we must destroy the Labor party to save our country.

        • If that’s the case, why would you defend them? I’ve said it before, you’ve got skin in the game, you’re attached to the party aren’t you!!!!!

      • While I think due to timing (like any asset market) benefited the elderly vs the young this isn’t the fault of the oldies. Just lucky market timing in the overall debt super cycle. If you were them you should of done the same.

        The young are partly to blame as well; they are the actors causing the current changes to occur and often they don’t understand the implications of their beliefs/virtue signalling. Whether it is:

        – Mass immigration (open borders) causing higher house prices, lower job security and higher youth unemployment.
        – Traveling every year across the globe on a plane for a great holiday but complaining about climate change.
        – Wanting cheap foreign goods (no tariffs, high AUD) but complaining we can’t compete with manufacturing and China slave labor.
        – Complaining about the lack of local community but constantly checking Facebook/Insta/etc.

        They are the ones that are now running the society; they have the power to change it to their benefit but whether sheer confusion, lack of critical thought or ignorance .. whatever the reason they aren’t doing it. They aren’t following the policies of the previous era so they can’t expect the same results I would think.

        • Looking at an election results map, I’m wondering what effect the demographics of the cities had on Labor winning seats. That is, young people voting Labor.

          It’s frightening that as those people end up in the regions later in life, they’ll vote Labor.

          If the young don’t change, we’re doomed.

          • The problem is deeper than the parties Tote. Fundamentally the young I’ve talked to have a shallow understanding of the world to the point they seem to self sabotage. They fight for causes that make their lives worse in the long run. They want to save the environment and prevent climate change, yet are consumeristic and “experienced focused”. They want to have job security, but keep thinking technology will save them from their future problems when all evidence suggests it has increased youth unemployment via automation. They support immigration, yet the best thing for the environment is population reduction which works best when you let countries face the pain of their overpopulation rather than give them a relief valve to emigate to less populated countries. Most tech advancement is accruing to big capital holders anyway nowdays. I could go on and on.

            While the world doesn’t understand cause and effect Labor and Liberal will do what they can to win voter groups over that they think they can – doesn’t mean what they are doing actually makes sense or if it does doesn’t benefit a vested interest (who actually knows the above).

  6. This whole old/young nonsense is not very helpful.

    The situation can better be described as such:

    On average people who bought housing when it was adequately supplied and reasonably priced are much better off than those who are forced to rent housing now that it is in shortage and extortionately priced.

    • The Traveling Wilbur

      Correct. But it’s also correct that blatantly age-based skewed election bribes under Howard got Australia a signficant way along the journey to where you describe it is now.

      And old people smell funny and don’t like Seinfeld or JJJ so it’s ok.

      Except Boom. Boom’s rad.
      And doesn’t smell funny either.

      • I find it very strange how quickly people forget Howard and his pork barrelling. Bloody Howard, what a piece of work. Never hear Totes talking about how Howard ruined the country….

    • boomengineeringMEMBER

      Claw,
      Yep, why get divided and conquered .
      All in the same boat really, the young are lucky not to be paying 20 per cent interest the old are lucky to have paid less dollar’s

      • Anyone with a pen, paper and calculator should be able to figure out why they’d be better off with 20% interest rates for a few months on an amount an order of magnitude smaller and amidst dramatic wage inflation, than today.

        • boomengineeringMEMBER

          Just generalizing to blunt the pointy ends, of course we boomers had the best lives in history, between major wars and economic prosperity. So in the quest for wokeness the young are destroying what’s left.

          • The _young_ are destroying what’s left !?

            What do you think the typical age of Australia’s MPs, directors of boards, CEOs, billionaires, etc, is ?

            Pro tip: there’s no incompatibility with “not being a b1goted cvnt” and “prosperity”.

    • …rent housing now that it is in shortage and extortionately priced

      Claw, there is a much worse scenario than this. That is, the shortage in housing, prices fall significantly, and still, not many are able to afford to buy somewhere a place to live.

      Over the past 20 or so years, I’ve been to Japan quite a few times. During their boom times, not enough property (so the propaganda machine said), and super-priced property. Five to six years ago (when I was there twice again), when many properties were still way below what they once were. People I know saying to me, gee! that’s cheap, but I can’t afford it.

      Then again, many here that shouldn’t purchase a property due to their finances, are still buying. I guess most people, just about everyone else apart from a very few, are poor, many of which just don’t know it yet.

  7. I remember saying oldies were living the high life long ago and was creamed on MB because of it.

    Plenty jumped on “oh yeah sure totes, pensioners are swimming in money…..what do you want? Pushed out of their homes?”

    $600 a week pension is obscenely generous.

      • You comparing your lifelong of work with a life of subsistence on welfare?

        No wonder this country is falling apart.

        You can’t have it all. That’s why our country is doomed. High wages and high welfare? Not going to happen.

    • The aged pension rate is around $470 a week for singles and around $350 a week (per person) for couples. It is heavily means tested.

      https://www.superguide.com.au/in-retirement/age-pension-rates

      In terms of share of GDP, we actually have one of the least generous aged pensions in the OECD.

      https://data.oecd.org/socialexp/pension-spending.htm

      It is our superannuation system that makes our retirement income system expensive, but the benefits mainly go to the top 10%.

        • The problem is that your house isn’t a liquid asset. Reverse mortgages have very high interest rates (10 or 11 year debt doubling time), so that, if the pensioners live for any length of time, they end up owing far more in interest than the value of any benefit that they have actually received. This is highly regressive. If your parents are middle or working class people without many assets besides the house, the bank or the government end up getting the lot, and you get nothing. If you are getting your welfare from superannuation tax concessions rather than a pension, you don’t have to pay back a cent, and your family can build dynastic wealth with property ownership. A much fairer solution would be to tax houses when they are passed on, although I would exempt the surviving spouse or an actual dependant.

  8. Wow the percentage change difference between single parent and non-elderly single male is interesting. I wonder what the net tax paid/transfer payments received profile looks like compared between those two groups.