Generally speaking, Baby-boomers acquired more resilience, Gen Xers became more disciplined, and Millennials have the most resources. So, which generation is likely to produce the highest portion of people who succeed at earning a comfortable retirement?
It must first be said that every generation has already produced heroes, high-achievers, villains and victims. There are no tangible limitations stopping any individual from achieving whatever they truly set their focus on.
But the aggregate achievement of any generation will always be influenced by learned behaviours and priorities that became common from each generation’s unique points of difference.
Major events that attributed to the world as it was during the childhood years (age 0 to 15) of each generation often influence the attitude and common tendencies of a generation in a broad sense.
Each generation also had different conditions to navigate upon entering the workforce and to get the first foot on the property ladder. From age 16 to 35, the economic challenges, home lending environment and social trends were different for each generation.
With the youngest of the Baby-boom generation now being 60yo and their income-earning years behind them, we already have more than enough official data to evaluate their retirement lifestyle.
Shortly we will demonstrate that the aggregate retirement picture for Baby-boomers is not a pretty one.
On the balance of probability, Generation X (those born between 1965 and 1979) will achieve more from fewer resources than Gen Y – the Millennials, born between 1980 and 1994.
Fun Facts
- The average age of retirement increased significantly from 54yo in the year 2000 to 65yo in 2022
- 4,181,800 living Australians are fully retired from the workforce (up from 3,179,700 10-years earlier)
- 130,000 to 200,000 people retired during each of the last 10-years. Meanwhile, the total population increased by an average of 350,000 in each of those years
- 1,462,000 Australians are fully financially independent (only 31 percent of the 65yo+ population)
- 2,583,000 Australians are currently receiving an aged pension, at a current annual cost to taxpayers of $70 billion
- 62 percent of Australia’s total household wealth is held in residential property (their own home plus investment properties, of which everyday Aussies have funded 91 percent of the total national rental pool)
- While there were never-ending cries about ‘housing affordability’ in every generation, an average of 107,000 households became first homebuyers in each of the last 10-years.
The number of Australians aged 70+ has already increased from 720,000 people in1973 to 3.2 million in 2023. The government forecasts this to rise to 5.5 million by 2043.
That’s 5.5 million compelling reasons to highlight the importance of encouraging households to invest in their own future, as opposed to depending on aged pensions.
Generational summary
Silent or ‘Builders’ generation (born 1925-1945)
Whilst 94 percent of current Australians were not even born when World War 2 ended in 1945, there were 1,641,039 living Australians who were age 78 years or older in June 2023.
- Events
Great Depression (1930s), World War 2 (1939-1945) - How they grew up
A staggering 1 million Australians served in WW2 (which equated to almost every adult male aged 16-40). This generation and their parents endured prolonged and extreme adversity through war and deep economic depression. Don Bradman was everyone’s hero. Media mogul Rupert Murdoch and Westfield founder Frank Lowy are part of this generation. - Lifestyle
Poverty, commuting via bicycle, intercity transportation via train or boat, and going to the theatre. - Housing
Outdoor dunnies and lots of home-sharing. More than 50 percent of households rented. Homeownership was acquired predominantly through buying land, then building. But credit supply was limited (banks generally did not consider home loan applications until the borrower fully owned the land). - Tendencies
Focus on financial survival. They were patriotic and backs-against-the-wall fighters. This generation learned to became thrifty, to be resourceful and patient, to appreciate the core essentials. - Legacy
The ‘silent generation’ is a complimentary reference to their get-on-with-whatever-needs-doing attitude, minus the current-day complaining. While the national population boomed from 7 million directly after WW2 to 11.5 million in 1965, the ‘Builders Generation’ were instrumental in developing the foundation for Modern Australia. This generation deserves great praise for their role in large-scale construction of roads, bridges, factories and post-war housing estates.
Baby boomer generation (born 1946-1964)
In June 2023, Australia’s total population of 26.7 million included 5,051,120 baby boomers (or 19 percent of the nation). They were aged 59 to 77 years.
- Events
In addition to observing their parent’s suffering from WW2 and the Korean War (1950-53), baby boomers served in Vietnam War (60,000 Australians between 1962 and 1973). The global oil crisis (1973-85) was also significant. - How they grew up
This is the ‘populate or perish’ generation, defined by big families and a massive influx of European migrants. Australians were drawn from rural locations into big cities. Boomers drew upon life experiences more than university degrees. The packaged food evolution and colour TV (1975) was introduced during their childhood. Aspiration was actively encouraged more than any other generation. By the time Baby-boomers were adolescents, Australia’s longest serving Prime Minister, Sir Robert Menzies, was strongly encouraging the nation to buy a home, pay off the mortgage and retiring at 55yo.
Related article: the best time to be an Aussie
- Lifestyle
1-car households, stay-at-home mums, bus transportation, drive-in movies, The Beatles. - Housing
Widespread urban sprawl, predominantly 3-bedroom houses with wallpapered walls and lino floor coverings. Victor lawnmowers, the Hills hoist and electrical appliances were invented. Homeownership often meant overcoming a 30 percent deposit hurdle and paying a 10 percent interest rate. - Tendencies
The early stages of working life for Boomers were very challenging, as evidenced by 3x recessions within 14-years and 3-decades of inflation consistently around 10 percent. These challenges developed resilience. Boomers generally prioritised basic needs more than fancy possessions. - Legacy
Bill Gates, Steve Jobs and Richard Branson are just a few Baby-boomers who made a big global impact. Australian boomers helped to improve workforce conditions and introduced major financial reform such as bank deregulation, compulsory superannuation and the transition of mothers returning to the workforce. Whilst this generation significantly improved Australian homeownership rates, the importance of acquiring a sufficient retirement nest egg was completely overlooked. - Retiring
Those born before July 1960 (which is most Boomers) may begin to access a portion of their superannuation from age 55. While 80 percent of Baby-boomers own their home, only 3 out of every 10 households have achieved financial independence (the other 7 out of 10 depend on the $70 billion paid by taxpayers each year to fund aged pensions and the very modest retirement lifestyle that comes with it).
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Gen X (born 1965-1979)
The ‘X’ naming of this generation is apparently a self-proclaimed desire to not be defined or pigeon-holed (‘X’ referring to ‘unknown variable’). Generation X are now between 45 and 59 years of age. The size of this next generation to exit the workforce represents a very significant 18 percent of Australia’s total population, or 4,881,3648 people. That is enough to fill up two major cities the size of Brisbane and Perth combined.
- Events
The eventual end of the Stolen Generation, transition towards Asian ties more than the US and UK, space exploration, recession (1974). - How they grew up
The teenagers of the 1980s and early 1990s embraced pop, rock-and-roll (think Countdown & Rage) and Atari video games. Xers observed their parents battle many years of fast-rising living costs (inflation of 5-17 percent) and above-average unemployment. They were forced to earn pocket-money through contributing to household chores. Many Xers paid for their teenage leisure activities by getting a casual job during their later years of high school. - Lifestyle
Children playing outdoors, riding bikes, Slip-Slop-Slap, ‘throwing another shrimp on the bbq’ and VCRs. Desktop computers were common in the workplace by the early 1990s. - Housing
Early stages of suburban shopping centre developments, fast-food restaurant chains, the immergence of bigger houses on smaller blocks, and reversed-cycle air conditioning eventually becoming ‘the norm’. Throughout their 30s, Gen Xers consistently paid between 7 and 10 percent interest on a home loan. - Tendencies
Many Xers gained inspiration from sporting heroes (Dennis Lillee, Leigh Matthews, Michele Timms and Rocky) along with colourful Baby-boom entrepreneurs such as Kerry Packer, Alan Bond and Christopher Skase. Not being able to depend on their parents for financial support inadvertently drove Gen Xers to become self-motivated, goal-setters, disciplined and have a strong pursuit for independence. The early stage of their working life (1985-1995) was Australia’s worst economic conditions in 60-years, significant corporate and banking collapse. Accordingly, Gen Xers developed lateral-thinking skills and became more adaptable. Where possible, many Gen X households received 2-incomes. - Legacy
Tina Arena, Shane Warne and Elon Musk are Xers. This generation oversaw the introduction of the World Wide Web (‘www’); they replaced snail-mail and facsimile with email. Xers were significant in the evolution of mortgage broking, thereby creating much-needed competition and product innovation in the home lending market. - Retiring
Out of all of the generations, Gen X are best placed to have the highest aggregate volume of people who accomplish a comfortable retirement lifestyle. The evolution of Australia saw Gen X being dealt a superior financial hand than Baby-boomers. That included 2-income households, fewer periods of high inflation, employer-paid superannuation throughout their career and greater access to credit.
72 percent of Gen X currently live in an owner-occupied home. They are already the most active of the generations from a property investment perspective (39 percent of Australia’s landlords are Gen X, compared to Boomers representing 20 percent).
Generation X are about to enter the best sweat-spot of their financial life. Those who sow the most seeds now will rest on the best beaches in 10-15 years’ time.
Many Gen Xers already have significant equity in real estate (a legacy of starting early) and they are now best placed to deploy that equity.
Related article: How much is enough? How do you acquire it?
As the ‘nest’ at home empties, higher disposable income provides Gen Xers with greater financial capacity to leverage into a bigger asset base at a time when housing supply across Australia is consistently dire.
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Millennials or Gen Y (born 1980-1994)
- Events
Recessions (1982 and 1991), Asian Century, regional infrastructure investment (airports, highways) - How they grew up
The children of the Boomers were the first ‘global generation’ – Millennials have only ever known a world that is connected by the internet, social media and instant access to everything. Their parents were determined to ensure that their Millennial children did not ‘go without’, like they did as a Boomer child. Compared to previous generations, Millennials enjoyed significantly more retail consumption and lifestyle exuberances. Sunday trading became common at the turn of the century, followed by online shopping a decade later. When the GFC hit in 2008, the world was reminded that Australia has the world’s best capitalised banks, most prudent credit policies and most resilient property markets on the planet [refer here]. - Lifestyle
A high portion of Millennials chose a white-collar career with a HECS debt ahead of a so-called ‘less sexy’ blue-collar job. During their 20s and 30s, many had a strong preference to live in an inner-city apartment within walking distance of their job (or university). Adult Millennials are mostly 2-income households, beneficiaries of paid parental leave (from 2010 onwards) and have fewer children than previous generations. - Housing
Millennials were a big part of Australia’s shift towards a significantly higher density country with bigger houses and 2-cars on a smaller block, or couples living in high-rise apartments. And the rise of the Wi-Fi world. During every year since the turn of the century, more existing Australian residents chose to pack-up and relocate away from capital cities to different parts of regional Australia.
Related article: The truth about Housing Affordability
- Tendencies
Many demographers across the globe refer to the Millennial’s strong sense of entitlement and describe it as “Generation Me”. This generation has high confidence, they value expediency, are reliant on social media and are more likely to participate in public protest. They are more inclined to prioritise living-in-the-now (travel, car upgrade, dining out, a new outfit…). Homeownership, having a family and financial independence are often secondary considerations. For perspective, despite 20-years in the workforce, an estimated 800,000 Millennial households are yet to accomplish property ownership. - Legacy
Smartphone, Apps, greater equality, high-rise apartment boom and higher obesity. Millennial entrepreneurs have used tech and improved economies of scale to disrupt conventional business models (eg. Uber). Some Millennials have embraced RentVesting as an alternative path, demonstrating to Boomers that the so-called rent-money-is-dead-money is a notion for dinosaurs. - Retiring
With the superannuation guarantee rate being 9 percent or higher since 2002, Australian employers will contribute significantly more towards the retirement lifestyles of Millennials than all previous generations. But, on the balance of probabilities, by the time they want to exit the workforce, the superannuation access age will be nudging 70.
Having the discipline to invest outside of the ‘vault’ referred to as superannuation should be important to all generations.
Related article: Here’s how to accumulate a property portfolio
Millennials (Gen Y) have received an even better ‘financial hand’ than Gen X. They have all of the resources – including the Bank of Mum and Dad – but their priorities, money habits and discipline are (stereotypically) different to previous generations.
Those who put their mind to it are very capable. Approximately 100,000 Australians become first homebuyers each year.
So far, 41 percent of Millennial households live in an owner-occupied home.
Analysis of ATO and ABS statistics by Propertyology suggests that an estimated 700,000 Millennials (people aged 29-43) are already property investors.
100,000 existing Australian landlords are less than 30-years old.
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