The boomers have ruined it for us all.  

Or so the narrative says.

The older generation has not only hoovered up the nation’s properties, driving up costs and wasting bedrooms.  They’re now pushing up inflation with their reckless spending, too.

While the rest of us struggle to put food on the table, clothes on our backs and give up on the prospect of home ownership entirely, the boomers are spending up big! 

As a generation, boomers make up 25% of the population but own more than half of Australia’s national wealth – and counting.

In fact, since 2012, the average net worth of an Aussie boomer has soared from $1,086,365 to $1,239,700, up 14%. The Millennials? A paltry 9%. 

Surely, this has to be proof of a generation benefiting unfairly from decades of government mollycoddling? 

At Fox & Hare Financial Advice we’re not so sure. If this narrative is true, why do one in four Australian boomers live in poverty? 

If the boomers are sucking up Australia’s homes at such an unprecedented rate, why is one of every seven Australians experiencing homelessness over the age of 55? And why are women over 55 the fastest growing cohort of homeless in the nation?  

The answer: not all boomers are rich.  

In fact, vast swathes of our nation’s ageing and elderly population are quite the opposite. They’re living in cars, shelters, and public housing with little to nothing. Many times all they have to their name is debt.  

The truth of the matter is that only some boomers, those fortunate enough to have been able to build a healthy super balance, invest and buy property, share in the oft discussed wealth of their generation.  

The bottom fifty percent of boomers have nothing, or less than nothing, and if current trends persist, the younger generations are set to fare even worse.  

In a nutshell:

• Boomers are not uniformly wealthy and, despite media portrayals, many live in poverty, experiencing homelessness, hunger and insecurity.
• Property ownership and long view investment strategies are strong predictors of Boomers’ outcomes later in life. Those who did or were not able to focus on either face generally face significant struggles in later years.
• You can book a free 45 minute coffee catch up, to discuss your own financial situation with team at Fox & Hare here: book now

 

(Some) millennials are richer than Boomers, actually.    

While data from Australia is hard to find, research out of the US & UK shows Millennials, while often characterised as the first generation to be worse off than their parents, are not uniformly worse off.  

In fact, many enjoy a financial position far superior to that of the average boomer at the same stage in life.  

Just like the boomers ahead of them, some Millennials are thriving while others are left behind. Only this time around the gap is wider. The wealthiest Millennials have more than ever, while the poor are falling further behind.  

Home ownership rates suggest a similar dynamic playing out in Australia, too. Just over half (54%) of Millennials own a home vs 62% and 65% for Gen X and Baby Boomers at the same stage in their lives. This should be of concern to us all.  

Boomers who rent are more than three times as likely to be living in poverty. If generation X and the Millennials follow that trend, we can expect a significant jump in the number of ageing and elderly Australians experiencing homelessness and poverty.  

And we’re sorry to say that if our experiences at Fox & Hare are anything to go by, this seems plausible – if not likely.  

It goes without saying that many low and middle income Australians are struggling. We all know that stagnating wages and an overheated housing market are pushing our teachers, law enforcement officers, allied health professionals and many others out of our cities and into financial insecurity.  

We also know that things are increasingly difficult for those living with disability, experiencing long-term homelessness, struggling with addiction or any of the many other situations that can negatively affect your ability to get ahead.  

Surprisingly, a huge number of high income earners are on the ropes too – albeit with a greater opportunity to turn things around.  

So, in the face of the most difficult financial situation our generation has faced, what can we learn from those that have gone before?  

Don’t point fingers. Take notes.  

Don’t be suckered in by simplistic, ad hominem attacks on your parents and grandparents. As we’ve seen, vast swathes of Australia’s ageing and elderly have not shared in the wildly uneven wealth of their generation.  

Of course, houses were cheaper 30 years ago. Yes, HECS wasn’t a thing. And we know, they’ve enjoyed an extended and unprecedented period of global growth. This does not mean there was no hard work, no scrimping, no scraping, and no smart decisions.  

Regardless of the price differential on housing between generations there are still many lessons to be learned from our forebears.  

ABS income data shows the primary source of income for a vast majority of middle and low wealth retirees come from government assistance – 94% and 80% respectively – with the divide between low and middle wealth likely a result of home ownership.  

Of course, ‘buy a home’ is hardly new or interesting advice – it is, however, increasingly frustrating.  

A more useful and less discussed lesson can be found in the difference in income between low, middle and high wealth retirees.  

Where low and middle wealth retirees rely almost exclusively on government assistance to get by, for high wealth retirees, a totally different picture.  

Less than 16% of ‘wealthy’ Boomers’ primary income is a result of government support. A whopping 70% is delivered by superannuation and other investments. READ: they’re living off money set aside earlier in life.  

Unsurprisingly, those households that took a long term, investment led view to their finances are now reaping the rewards. And this should be a primary lesson for those of us still in the wealth accumulation phase of our life.  

 

High income Millennials’ leaving themselves behind.  

The number of 20-45 year olds earning incredibly high incomes, yet still living pay cheque to pay cheque, is past the point of concerning.  

At Fox & Hare Financial Advice we regularly meet individuals who are earning six figure salaries, and have been for many years, with nothing to show for their efforts but mountains of shoes, frequent hangovers, and cars worth less than the loans that paid for them.  

Even more concerning, many in their 20’s, 30’s and, most stressful of all, 40’s are laden with tens, sometimes hundreds of thousands of dollars of debt, with no assets to speak of. 

If you are one of these people, you are treading an unnecessarily dangerous path.  

The trajectories of our parents and grandparents highlight the impact of forward planning on our outcomes. The majority of those who invested and paid attention to their super are now living off the fruits of their labour.  

Those who did or were not able to do the same have a greatly increased risk of poverty, instability, and homelessness.  

Even worse, while the stakes are just as high, we are now playing on hard more.  

The barriers to home ownership are significantly higher, bordering on impossible for some, salaries are going backward for many, and the global outlook feels uncertain at best.  

So, what do we do? As always, what we can.  

Rentvesting: how to buy homes in an overheated market. 

“We’ve got a lot of creative ways to help our members get ahead.” Says Fox & Hare Financial Advice co-founder and financial adviser, Glen Hare.

“People come to us because they want ‘financial freedom’. This looks very different from person to person but usually involves owning property and having enough money to make some significant change in their life, like retiring early or moving overseas as a digital nomad. From our perspective, getting onto the property ladder is the harder of the two and getting harder every day”. 

Property prices, especially those in Sydney and the other capital cities, have soared over the last few decades. They’ve outpaced salary growth with average and median prices now feeling well out of the reach for those earning low and even middle incomes.  

“One of the biggest issues we see is those who don’t have access to the bank of mum and dad feeling totally locked out of the property market. But it doesn’t have to be that way” says Hare.  

“The way that I overcame this obstacle myself was to ‘rent-vest’. I bought a property I didn’t intend to live in, in an area that was not as sought after. I paid off the more affordable mortgage while renting near the beach.”  

If you’re a single woman living in Bondi but unable to buy there right now, rather than writing off property ownership as a lost cause, you could look to buy in an area that you can afford while still renting in the Eastern Suburbs.  

I did this, a heap of our members have done this, and it works. Once you’ve got your foot on the ladder it’s much easier to upgrade later.” 

Of course, while the data has shown that property ownership is a good predictor for stability later in life it is not a sure thing. Those boomers that are now living comfortably and living off the returns on investments made earlier in life. For many that  includes income on investment properties but also super and stock portfolios, two very often forgotten heroes in Australia’s wealth debate. 

 

Building wealth without property? It’s a thing. 

“One of my members is 29 years old and already very well set up for retirement” says Trish Gregory, Financial Adviser at Fox & Hare. 

“She’s been putting extra money into her super over her twenties. That decision has now taken a big financial stressor off the table.”   

A thirty year old who invests $200 every month until sixty five would cash out $634,746. That’s only $84,000 deposited, but a whopping $550,746 in interest. The same person investing $100 would walk away with $313,373. That’s $275,373 in interest from deposits totalling $42,000.

“People don’t see the massive impact these little actions will have on their lives later down the line. Can you find an extra $100, $500, or even $1000 in your monthly budget? If yes, that can have a huge compounding impact moving forward.” Says Gregory. 

“A properly executed investment plan can and will make a big difference in a person’s life. Even better, the barriers to entry are much, much lower than those in the property market” adds Hare. “You can get started with $100 rather than having to save a $100,000 deposit. It’s also much more flexible. You can’t sell the bathroom in your investment property if you need the cash somewhere else.” 

It’s undeniable that many of Australia’s 20-45 year olds are being left behind. What’s being lost in the conversation is that many of Australia’s Boomers were left behind, too. We can see, in the older generations, a gap that will only widen between the haves and have nots as young people age into a future with less home ownership and, as a result, less financial stability. It’s a dire picture but there is an important lesson here, too.  

The boomers who did ‘make it’ are largely living off the returns on investments made earlier in life. Even those who are not living particularly comfortably, but still enjoy the stability of home ownership, illustrate this case.  

Without a doubt, many of these individuals would have been the recipients of loans, leg ups and other privileges from the bank of mum and dad. Right or wrong that’s just how things have been. Regardless, the lesson still stands.  

If you want any form of financial freedom in your future. You need to start thinking about it now. 

 

What’s next?

Are you ready to take the next steps toward financial security? Reach out to Fox & Hare for a free virtual coffee catch up.

We have helped hundreds of 20-45 year olds unlock their potential and find the freedom, security and stability they deserve.

We can assess your current financial world – and give you 100% clarity on how to:

• Pay down debts
• Save to buy a home
• Quit work for a career change / to start a business
• Achieve financial freedom

With clear, reliable and realistic time frames.

If you want to be debt free? We can tell you exactly how long that will take. If you want to own a home? We can tell you how long that’ll take too.

We only take on 10 new members every month, that’s a maximum of 120 spots every year!

And there are less than 5 advisories servicing the 10 million 20-45 year olds currently eligible to work with us. So, if you want to put an end to that feeling of unease “when will I be able to buy a home?” “When will I be debt free?” “Will I ever feel financially secure?” Hit “Book now!” and claim your free virtual coffee with Will today. 

Book now!

 

 

About Fox & Hare:

The company was Founded in 2017 by two former Macquarie execs. Fox & Hare aims to empower and educate Australians in the wealth accumulation phase of their life journey. Through the provision of a safe, inclusive and accepting environment, they’ve built a diverse and devoted following of 20- 40 somethings. Members come from many backgrounds, abilities and genders. The organisation and its co-founders have featured in the AFR, Equity Mates and Sydney Morning Herald. They have been included in Financial Standard’s Power 50 and Glen Hare was voted Australia’s best Financial Adviser for 2024.