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Australians' wealth and retirement

By Simon Kelly - posted Sunday, 15 July 2001

You will probably need a pencil and paper for this – we are going to work out your financial net worth. Start with your family home – write down its current value less any outstanding mortgage (if you are married then use half the value and half the loan). Add to this the amount you have in the bank or term deposits; the value of any shares you own; the value of your rental properties (less investment loans); any business assets you have; and the total of all those small amounts you have locked away in various superannuation accounts. The answer is your net worth or wealth.

The National Centre for Social and Economic Modelling (NATSEM) at the University of Canberra have estimated that the answer for the average Australian is $127,000. The components of this average wealth being $13,000 in the bank, $9,000 in shares, $56,000 equity in the family home, $10,000 equity in rental properties, $17,000 in business assets and $24,000 in superannuation. Are you an average Australian?

NATSEM estimates the total of Australian personal wealth in 1998 at $1,711 billion. This represents growth of 8.5% per year since 1986 (4.5% after discounting for inflation). However, not everyone saw this growth. One in ten Australians has no wealth and is in fact estimated to be $1,000 in debt. At the same time the wealthiest 10% have an estimated $553,000 in assets. This richest 10 percent owned 85% of all shares, 72% of rental investment properties and 60% of business assets. Overall, the top half owned 90% of personal wealth. This left only 10%to be divided among the remaining Australians.


What is the most popular way of building wealth? The family home. On average it represents almost half a person’s wealth. For middle Australia it represents more than 60% of their wealth. As expected, the housing contribution to wealth in the poorer and richer ends of the wealth scale is not as strong as it is in the middle. At the poorer end, people do not have the deposit required to purchase a home or the value of their home is negated by the size of the mortgage. At the rich end, the equity in the home is only one of a range of assets contributing to the person’s wealth.

Superannuation is the next biggest asset for most people and appears to be the least concentrated. The introduction of award-based superannuation in 1986 and the Superannuation Guarantee Charge (SGC) in 1992 appear to have helped people to make some savings for their retirement. With contributions being made for almost every employee under SGC and these funds not being available until retirement, people who formerly would have had no assets at all are now saving 5-9% of their earnings each year. For the least wealthy, this forced saving is very significant and often represents almost all of their wealth.

The estimates above are taken from a paper, Wealth On Retirement – Latest Estimates For Australia, which compared the wealth and other characteristics of one group of Australians – those about to become eligible to Age Pension - with the remainder of the population.

The About to Retire group was found to have a higher proportion of women than the remainder and a high proportion of both sexes had already left the workforce. The finding that there were a higher proportion of women was not surprising – women retire younger than men (at present) and live longer. The finding that a high proportion (48% of men and 69% of women) were already not in the labour force was surprising. Two types of workers in particular appeared to have left the labour force. The first being men in physically hard occupations (like tradesmen and labourers) and the second being professionals (both men and women) who may have already accumulated the wealth required to retire early.

People in the About to Retire group have significantly more assets than the remainder of the population. They are estimated to have assets to the value of $216,000. This is almost twice the average. This high level of wealth is not surprising given the ages within the group. In general, assets grow in value with time. This means if people invest wisely, wealth will rise with age. The About to Retire group (in their 60s) is considerably older than the average and their wealth reflects this. Despite the advantage of age, an estimated 3.4% of the group still had no wealth and were in the lowest wealth decile.

The spread of assets for the About to Retire group was similar to the remainder of the population with the exception that men about to retire were not as inclined to have their assets in rental properties as the remainder of males (2.2% against the average of 8.7%). The reason for this is not clear.


Overall, the group about to retire were wealthier than the average Australian, more likely to be a female and no longer in the labour force. However, they did the same things with their assets – put them into a home and superannuation.

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This is an edited version of Wealth On Retirement – Latest Estimates For Australia, which was presented to the Ninth Annual Colloquium of Superannuation Researchers at the University of New South Wales. Click here to read the full report.

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About the Author

Simon Kelly is a researcher at the National Centre for Social and Economic Modelling.

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