The savings gap between older Australians and Generations X and Y is growing, according to ME’s recently released Household Financial Comfort Report.
The study found retirees and baby boomers have become more financially comfortable over the past four years as the value of their homes and superannuation balances have grown. However, during the same period the financial situation of Generation X and Generation Y households has remained static.
Retiree households in Australia have an average net wealth of $577,000. In contrast, younger Australian couples with young children have a much lower net wealth of $366,000.
The widening gap is largely caused by growing house prices that have helped older Australians but shut many young people out of the property market. It’s notable that renters showed lower levels of financial comfort than home owners.
ME researchers also worry that proposed changes to the superannuation system will hurt younger savers with time left in the workforce rather than retirees and baby boomers. They say richer, older Australians will be better able to manage changes like a reduction in superannuation tax breaks.
The report noted that less than 20 percent of Australians are putting extra money into their superannuation, and are instead relying solely on employer contributions. Numerous studies have shown this approach is unlikely to provide a sufficient nest egg for a comfortable retirement.
The ME study highlights how important it is for young Australians to take steps early to build their wealth. If you’re concerned about your financial future, speak to the experts at Chase Edwards. We can offer you a free financial health check so you can get an honest appraisal of your financial situation and the steps you should take to secure the retirement you want. Book your appointment with our money experts today on 1300 854 833.