Four out of five baby boomers own their homes, according to a new report which reveals that `boomers' are better prepared financially as they approach retirement than many people believe, with high average wealth, historically high levels of home ownership and with their debt largely under control.
The 16th AMP NATSEM Income and Wealth Report, Baby boomers - doing it for themselves, released this week by AMP and the National Centre for Social and Economic Modelling (NATSEM), also reveals big increases in labour force participation rates by older baby boomers to help them fund their forthcoming retirements.
Baby boomers - people aged between about 45-64 years, who make up around one-quarter of Australia's population - hold one-half of the nation's total household wealth, much of it in the value of their homes. Four out of five baby boomers own their homes - a level of home ownership that is high both by international standards and when compared with other current and past generations.
The average equity in their homes of $161,000 per person represents around 42 per cent of the baby boomers' total net wealth, compared with an average superannuation balance of just $65,100, which is 17 per cent of their net wealth.
Almost three-quarters of all baby boomers carry average debt of $59,000 per household, which is relatively moderate in the context of their average net wealth of $381,000. South Australia and Western Australia have the highest proportion of baby boomer households in debt, while the ACT/NT and Tasmania have the lowest.
While around one in three 45-64 year olds are still managing their mortgages, only one-tenth of the group aged 60-64 years are still paying off their home, and one-fifth of this older group still have children at home. Boomers in Victoria and Tasmania are more likely to have paid off their mortgages than those in New South Wales and Western Australia.
AMP Financial Services Managing Director Craig Dunn says the boomers' high share of the nation's wealth is welcome news as they begin to plan their retirements, even though a large proportion of their wealth is bound up in illiquid assets - namely, their family homes.
"When it comes to meeting day to day living expenses in retirement, you can't eat bricks and mortar and so this will be something for people to consider when they decide to retire.
"But the baby boomers have more flexibility and choices when it comes to preparing for their retirements than many people think.
"Boomers have options and it is never too late to take advantage of them. These include choosing to work longer, saving more for retirement and earning more on their savings by taking more - but acceptable - investment risk.