Another highlight from the tax review are these charts of the distribution of net worth and income in Australia. The chart above shows the mean net worth of each income and net worth quintile in Australia. The median net worth is far in excess of the level in the US at around $A350k vs. $US93k in the United States. There is less difference in the means - $A563k vs. about $US450k - reflecting the greater degree of wealth inequality in America. Interestingly, the second income quintile has higher mean net worth than the third income quintile. Obviously a lot of retirees with low income but high housing wealth and some superannuation are in this second income quintile.
Our net worth places us about on the border between the third and fourth quintiles with 40% of Australian households wealthier than us. The long-term perspective, including expected inheritance money, puts us exactly at the mean of the top wealth quintile with less than 10% of households better off than us.
The following chart shows how your net worth should relate to age:
The average 43 year old household should be at close to 100% of average net worth. The average 33 year old household should be at 57% of average net worth. So we are ahead of the game on an age basis too.
2 comments:
Interesting that the averages are so much higher than the US. At a guess, the fact that Australia has been running a compulsory super scheme for some time would account for at least part of the difference?
Yes, I think so and the fact that the average house in Australia has a price near the Californian average - twice the US average. The runup in prices was recent and so most homeowners have high equity. Also the strength of the Australian Dollar exaggerates the numbers.
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