Super to become bigger asset than housing?

A 12 year longitudinal survey of more than 19,000 Australians has revealed some fascinating insights into our superannuation balances.

The author of the most comprehensive long-term study of Australians believes superannuation will become the average Australian’s biggest asset in 13 years or sooner, overtaking housing – the “great Australian dream”.

The results of the University of Melbourne’s Household, Income and Labour Dynamics in Australia (HILDA) survey revealed average super balances grew over twice as fast as net home wealth between 2002 and 2014.

The average household superannuation balance grew 66 percent from $112,114 in 2002 to $186,011 in 2014. But average net home wealth (mean home value minus mean home debt) only grew 27 percent from $229,900 in 2002 to $291,552 in 2014.

HILDA Deputy Director (research) Professor Roger Wilkins told Fairfax Media this trend is likely to continue.

“I would expect house price growth to be lower than has been sustained since 2002 and therefore think superannuation will overtake the family home sooner than 2029,” he said.

Australian house prices slow growth

What is the HILDA survey?

The HILDA survey tracked the lives of more than 19,000 Australians between 2001 and 2014.

It interviewed participants annually to develop insights into 12 topics: family life; economic wellbeing; labour market outcomes; household wealth; housing wealth; superannuation; material deprivation; child health and heath care utilisation; private health insurance; physical activity; and sleep.

HILDA Report Superannuation Findings

Regarding superannuation, here are some of the HILDA survey’s main insights:


A sign we’re retiring later?

According to the survey:

  • In 2002, mean superannuation balances peaked at age 55-59 for men and 50-54 for women.
  • In 2014, mean superannuation balances peaked at age 65-69 for men and 60-64 for women

Are we retiring richer?Are we retiring later

Thanks to the HILDA survey, we can also compare the super balances of age groups in 2002 with the same age groups in 2014.

For example, as you can see below, men and women aged 60-64 in 2014 had over $120,000 more super than men and women aged 60-64 in 2002.

Change in average superannuation balance from 2002 to 2014 (Over 60s)
Age Group Men Women
60-64 +$138,649 +$123,828
65-69 +$169,939 +$98,133
70-74 +$118,489 +$107,076
75 and over +$53,391 +$20,257

Source: HILDA Findings 2016. Change measured in December 2014 prices.

Why have we seen this rise in average balances?

There could be a range of reasons, but government policy has probably had one of the biggest impacts.

For instance, there have been increases to the minimum super contribution rate. When the Superannuation Guarantee was introduced in 1992, the rate was 3% of earnings. It’s currently at 9.5%, with scheduled proposals to increase it to 12% by 2025.

Better tax incentives would have also played a part. For example, in 2006 the Howard Government moved to exempt from income tax all superannuation earnings and drawdowns in retirement, which may be an incentive for current workers to increase their superannuation savings.

As you can see below, there hasn’t been as much of a rise in mean superannuation balances for younger age groups.

Change in average superannuation balance from 2002 to 2014 (25-60)
Age Group Men Women
25-29 +$964 +$263
30-34 +$5,371 +$1,674
35-39 +$10,438 +$11,337
40-44 +$16,990 +$14,518
45-49 +$20,115 +$31,283
50-54 +$45,868 +$30,845
55-59 +$31,178 +$52,133

Source: HILDA Findings 2016. Change measured in December 2014 prices.

Professor Wilkins told Fairfax Media this surprisingly little growth might be because of subdued share market returns and lower work participation since the GFC.

“When you look at how big the growth is for the older age groups I think a lot of that is driven by people piling all their assets into this tax-sheltered option as they reach retirement age,” he said.

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