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Income and Wealth Distribution in Australia

May 20, 2025

Understanding Wealth and Income Distribution in Australia

Introduction

  • Analysis based on a report from the Grattan Institute.
  • Focus on what it takes to be in the top 1%, 5%, or 10% in Australia by income, superannuation, home equity, and net worth.

Income Distribution

  • Average Australian Income: $52,000 annually.
  • Top 10% Income: $137,000 annually.
  • Top 5% Income: $181,000 annually.
  • Top 1% Income: $364,000 annually.

Household Income

  • Median Household Income: $92,856 annually.
  • Top 10% of Households: $235,000 annually.
  • Top 5% of Households: $305,000 annually.
  • Top 1% of Households: $531,000 annually.

Geographic Distribution

  • Western Australia has the highest share of top-income earners.
  • New South Wales and CRA follow.
  • Tasmania has the smallest proportion of high-income earners.

Wealth Distribution

  • High income does not always equate to high wealth due to spending habits.

Superannuation

  • Young Adults (25-40):
    • Average Super Balance: $25,000.
    • Top 5%: $158,000.
    • Top 1%: $293,000.
  • Middle-Aged (41-64):
    • Average Super Balance: $90,000.
    • Top 5%: $626,000.
    • Top 1%: $1.4 million.
  • Retirees:
    • Common Super Balance: Less than $149,000.
    • Top 1%: Nearly $2 million.

Household Super Balance

  • Young Households:
    • Typical Balance: $60,000.
    • Top 5%: $279,000.
    • Top 1%: $473,000.
  • Middle-Aged Households:
    • Typical Balance: $79,000.
    • Top 5%: $968,000.
    • Top 1%: $2 million.
  • Retired Households:
    • Typical Balance: $9,000.
    • Top 5%: $1.3 million.
    • Top 1%: $3.2 million.

Home Equity

  • Young Households (25-40):
    • Median Home Equity: $0 (many are renting).
    • Top 5%: $650,000.
    • Top 1%: $1.3 million.
  • Middle-Aged Households:
    • Median Home Equity: $325,000.
    • Top 5%: $1.4 million.
    • Top 1%: $2.8 million.
  • Retired Households:
    • Median Home Equity: $450,000.
    • Top 5%: $1.7 million.
    • Top 1%: $3 million.

Net Worth

  • Young Families (25-40): $238,000 typical net worth.
  • Middle-Aged: $89,000 typical net worth.
  • Retirees: $817,000 typical net worth.

Top 1% Net Worth

  • Young Households: $3 million.
  • Middle-Aged Households: $7.7 million.
  • Retired Households: $10 million.

Investment Insights

  • Importance of building wealth outside of home equity.
  • Need for significant assets and smart investment strategies to reach the top 1%.

Debate on Wealth Inequality

  • Discussion from "Diary of a CEO" podcast featuring Gary Stevenson and Daniel Presley.
  • Gary Stevenson: Advocates for taxing the wealthy and redistribution.
  • Daniel Presley: Believes in personal agency and entrepreneurship.
  • Concerns about wealthy individuals relocating to tax-friendly countries.
  • The debate highlights different perspectives on wealth inequality.

Conclusion

  • Wealth inequality is growing, and strategic financial planning is crucial.
  • Emphasis on using tools for tracking wealth and investments.

Note: Further resources such as a Google sheet tracker mentioned for personal finance management.

Presenter: Irene

  • Encourages feedback and engagement through comments.

Full transcript