The wealth and wellbeing gap between young and old is finally starting to narrow after a seven year streak of growing inequity according to new research out of the Actuaries Institute.
According to Hugh Miller, who compiled the Australian Actuaries Intergenerational Equity Index (AAIEI) along with actuaries Ramona Meyricke and Laura Dixie, last year’s index revealed the “relative wealth and wellbeing” of those aged 25-34 was lower than at any other time in the past two decades.
This year’s update shows that those aged 65 to 74 years of age have declined rates of wealth and wellbeing, while those aged 25 to 34 have higher scores.
“2020 was a year like no other for everyone,” Miller says. “The Index shows, perhaps surprisingly, younger people doing slightly better than they have previously, closing what had been a record gap between generations.”
The turnaround may be temporary, however, as it reflects (among other things) “government support directed towards young people through Jobkeeper and Jobseeker payments”, which ended in March this year.
The Index, which uses metrics across economic, housing, social, health and disability, education, and the environment, has shown a widening gap between the young and old cohorts since 2012, Miller explains.
The recent budget, which was weighted to supporting older Australians, could actually exacerbate the spread when combined with the withdrawal of stimulus packages like Jobkeeper and Jobseeker, he says.
“Some parts of the budget will continue the trend towards a widening gap between the older and younger age bands,” he says. “The significant increase ($18 billion over 5 years) in aged care spending is welcome but will continue the trend of a greater share of government spending being allocated to older Australians.”