To kick off the new year, accounting and advisory firm KPMG has posted the latest average wealth statistics for the nation, and the results might surprise you.
The report, which analyses "asset distribution across four generational cohorts", breaks down the asset ownership and wealth numbers for Baby Boomers, Gen X, Millennials, and Gen Z.
So, how does your wealth compare to the average in Australia? Let's see.
Average wealth in Australia
In terms of average net worth, KPMG found that Baby Boomers (born 1946–1964) remain at the top of the list, with a balance of $2.31 million. Net worth is what you own (assets) minus what you owe (liabilities).
This was closely followed by Gen X (born 1965–1980) at $1.88 million.
Meanwhile, Millennials (1981–1996) and Gen Z (1996–2012) hold an average of $757,000 and $96,000, respectively.
The spread of this data makes sense in that older generations have had more time to accumulate their wealth. Time is one of the central components of compounding, which is essential to long-term investment success.
But there's a devil in the details, as the wealth isn't created equally.
Housing still dominates
The report found that most age ranges had the bulk of average wealth tied up in housing.
Gen X has surpassed Baby Boomers to hold the largest wealth in housing, averaging $1.31 million per person. It also has the highest rates of home ownership.
Baby Boomers aren't far behind at $1.3 million.
Meanwhile, Millennials and Gen Z hold average housing wealth of $750,000 and $69,000, respectively.
KPMG urban economist Terry Rawnsley said Baby Boomers have "historically been the largest holders of housing assets", but have but started to "sell down their property portfolios" as they age.
Many Gen Xers are also inheriting property from Baby Boomers, in what's been dubbed the "great wealth transfer".
While the starters gun has been fired on the great wealth transfer, our findings still demonstrate a clear disparity in housing wealth between older and younger generations.
Despite this, younger Australians are finding it harder to get a foot on the property ladder. Home ownership rates for Millennials and Gen Z are significantly lower than those of Boomers.
What about shares?
With respect to shares, Gen X tops the list with an average wealth of $256,000 in value tied up in stocks like the S&P/ASX 200 index (ASX: XJO).
It has recently overtaken Baby Boomers, who hold $206,000.
Again Millennials and Gen Z have far less invested in the stock market, with averages of $51,000 and $7,000, respectively.
According to Rawnsley, the younger crowd appears "more cautious towards equities", which could stem from "financial pressures and less disposable income".
Debt levels are the wildcard, however.
Both Gen X and Millennials carry the highest debt balances, primarily due to mortgages, HECS and credit card debts.
Average wealth takeout
Average wealth trends in Australia are changing. As our older generations retire and dispose of assets, a so-called "wealth transfer" is set to take place.
But that won't happen overnight, and Baby Boomers are still the wealthiest generation overall. In the meantime, Gen X is creeping up on the lead, holding the highest average housing wealth in Australia, along with shares.
Time will tell if these trends change in the future.
