Managing Australia's $5.4 Trillion Wealth Transfer Challenge: An Economist's Warning

Australia's intergenerational wealth challenges are expected to worsen with a $5.4 trillion wealth transfer from older to younger generations over the next 20 years, driven by strong growth in superannuation and housing wealth. Economists, including Guy Debelle and the Productivity Commission, warn that uneven wealth growth and delayed inheritance timing could create social and economic challenges.

Australia's intergenerational wealth challenges are expected to worsen, with a projected $5.4 trillion wealth transfer from older to younger generations over the next 20 years. This significant shift is primarily driven by strong growth in superannuation and housing wealth, according to recent economic analyses [1].

Guy Debelle, a former Reserve Bank deputy governor, recently joined the conversation about Australia's wealth transfer challenges. In a speech in Sydney, he highlighted that one of the country's major challenges in the next decade or two will be managing the wealth transfer from older generations to younger ones [1]. The Productivity Commission also raised similar concerns in its 2021 report, noting that while household wealth has grown over the last 20 years, the growth has been uneven [1].

The commission's report indicated that the wealth of older Australians, particularly retirees, has grown significantly, driven by housing wealth and superannuation balances. The report also noted that older age groups own more housing wealth and inherit large housing wealth from their partners, contributing to the delayed timing of wealth transfers [1]. This delay can create social and economic challenges, as recipients of inheritances may be well into their careers and nearing retirement by the time they receive them.

The value of inheritances and the age of receipt have both peaked around 60 years of age, according to a recent report by JBWere. The report suggested that the increased age of receiving inheritances could be traced back to the rise in the average age of having children and increased life expectancy [1]. This raises questions about the need for recipients at this stage of life and the potential for bequests to be directed elsewhere where greater need exists.

The Australian tax system and housing situation have also been identified as contributing factors to these challenges. The former Treasury secretary Ken Henry warned that the tax system had deteriorated to the point that it could threaten Australia's social compact [1]. Dr Debelle linked Australia's housing and tax situation to global economic trends, warning that the political problems seen in many countries are symptoms of a larger problem: the failure to distribute the gains from economic policy changes [1].

The latest data from Cotality shows that property values in nearly half of Australia's suburbs were sitting at record highs at the end of June, with Brisbane and Perth also experiencing significant price increases [1]. This upward momentum in property prices has been fueled by the Reserve Bank's interest rate cuts this year [1]. However, despite these positive house price expectations, consumers remain relatively averse to real estate as an investment option and to risk in general [1].

In conclusion, Australia's intergenerational wealth challenges are expected to intensify over the next two decades, with a significant wealth transfer from older to younger generations. Addressing these challenges will require thoughtful policy decisions and a comprehensive understanding of the economic and social implications.

References:
[1] https://www.abc.net.au/news/2025-07-13/economist-warns-about-intergenerational-wealth-in-australia/105517036