The ownership of assets including property, superannuation, shares and managed funds is fuelling a large divergence between the financial comfort of older Australians and younger people, ME’s ninth biannual Household Financial Comfort Report shows.

The gap in financial comfort between younger and older generations has widened significantly since the first survey in 2011. The financial comfort of ‘builders’ (aged 75+) and ‘baby boomers’ (aged 50-74) has improved by 16 percent to 6.38 and 14 percent to 5.85 respectively since October 2011.

The comfort of ‘Gen Y’ (aged 18-34) and ‘Gen X’ (aged 35-49) has remained broadly unchanged over the same period, up only 2 percent to 5.56 and 3 percent to 5.16 respectively.

"Recent gains in the macroeconomic and financial environment including significant rises in property and equity values, has disproportionately lifted the financial comfort of older generations who tend to have higher levels of asset ownership or investments," said Jeff Oughton, ME’s consulting economist and report co-author.

"The findings add to recent policy debates around housing ownership and affordability, and the generosity of superannuation tax concessions for wealthier Australians. They highlight the importance of housing and superannuation as important wealth generators with both contributing to higher levels of financial comfort. They suggest that wealthier Australians may be better able to manage any wind-back to super tax concessions, while remaining at a relatively high level of financial comfort."

Oughton said older generations enjoy substantial improvements in their investments and income primarily through real estate and superannuation, while Gen X and Y have smaller investments and continue to struggle with property ownership. 

Younger generations are more likely to rent, reflecting the increased difficulty when it comes to getting on the property ladder. Oughton said the issue is exacerbated for the younger generations as prices and rents have grown faster than incomes, particularly in capital cities.