Every generation believes it has it tough financially.

Young Australians complain about housing affordability. Middle-aged Australians worry about mortgage repayments and childcare costs. Older Australians worry about having enough money to last them through retirement. They all have a point. 

The financial challenges facing Australians are remarkably predictable through the demographic lens. Our age determines what we earn, what we spend, what we save and what we worry about. 

Over the coming decade, six generations face six very different financial headaches. Understanding these challenges helps explain why governing Australia is becoming increasingly difficult (see last week’s column). 

Let’s start with the oldest Australians and work our way down the population pyramid. 

The generation paying for care

The silent generation or pre-boomers (born before 1945, aged 81-plus) 

The oldest Australians face a financial challenge – the cost of becoming very old.

Age 85 is an important demographic milestone. Around half of Australians aged 85 and over require assistance with everyday activities, depending on how care needs are measured. 

As people move through their late 80s and 90s, the probability of needing regular support rises sharply.

Some people can live their whole lives without needing care. Some older Australians can remain at home with assistance from family members or professional carers. Others require residential aged care. All care comes at a cost. 

Home-care services, modifications, medical appointments and mobility equipment can consume significant financial resources. Residential aged care can involve substantial accommodation and ongoing care contributions. 

Financial management itself can become more difficult as cognitive decline increases the risk of scams, exploitation and poor decisions. How long should you trust yourself in handling your finances? Who takes over and when? 

Meanwhile, families must navigate estate planning, inheritance expectations and sometimes ugly disagreements over how assets should be used. 

The Silent Generation’s central financial challenge is no longer accumulating wealth. It’s ensuring that their remaining resources provide dignity, security and appropriate care. 

The generation learning wealth isn’t income

Baby boomers (born 1946-1963, aged 63-80) 

Collectively, baby boomers are Australia’s richest generation.

Many boomers benefited from decades of rising property prices and compulsory superannuation, but averages conceal enormous differences. 

A boomer who owns a valuable home outright and has substantial superannuation faces a very different retirement from a renter relying on the Age Pension. 

Over the next decade, the central financial challenge for boomers will be converting accumulated wealth into reliable retirement income. 

The typical boomer will easily be retired for more than 25 years. Savings must stretch across decades of inflation, market fluctuations and changing spending patterns. So far retired boomers continue to spend merrily.  

Eventually, boomers too will face severe medical complications. Home modifications, mobility assistance and eventually aged-care services will become substantial financial burdens as boomers age. 

Housing creates a particular dilemma. Many boomers live in valuable homes that no longer suit their needs. A large family house might contain enormous wealth but provide little income. 

Downsizing seems financially sensible on paper. In practice, emotional attachments, transaction costs, suitable housing availability and the desire to remain near friends and family can make moving difficult.

Boomers in survey after survey are adamant that they don’t want to downsize and simply remain in their family home. 

Boomers face another temptation: helping their adult children financially. 

The “bank of mum and dad” might help the next generation enter the housing market, but every dollar gifted is a dollar no longer available to fund retirement.

Boomers worked with the understanding that they accumulate wealth to live a comfortable retirement.

Boomers might burn through a larger share of their wealth than previous generation, but at the same time they remain scared of running out of money in retirement. 

The generation burning the candle from three ends

Gen X (born 1964-1981, aged 45-62) 

Generation X burns the candle from three ends in the coming decade. Sure, it’s a weird candle but stick with me.  

They are the generation most likely to have overextended their mortgage during the super-low interest rate years. Rising interest rates hit mortgage-holders directly.  

Their teenage and adult children might need assistance with university expenses, rent or a first-home deposit. 

Meanwhile, their parents are entering their 80s and 90s, when healthcare needs, mobility limitations and aged-care requirements become increasingly common. ‘

Even when gen X isn’t directly paying for aged care, coordinating care takes time. That can mean reducing working hours, taking leave or turning down career opportunities. 

The candle really burns from three ends. 

All this happens just as retirement comes into view. Australians in their 50s have perhaps another decade or two to accumulate sufficient superannuation, pay off their mortgages and prepare for life without employment income. 

Those who divorced, experienced unemployment (and faced the humiliating prospect of re-entering the workforce at reduced income) or entered the property market late found themselves particularly vulnerable. 

For many gen Xers, the decade of financial stress will come to an end on a random Tuesday when they finally kick their kids off the credit card, the last mortgage payment is being made and their last parent dies (leaving them without care responsibilities and an inheritance).

The financial divide within generation X could widen considerably then between those who inherit substantially and those who don’t. 

The generation paying for everything at once

Millennials (born 1982-1999, aged 30-44) 

Millennials have entered what might be the most expensive phase of the life cycle. 

They’re buying homes, raising children, sending the kids to childcare and trying to establish careers. Unfortunately, all these activities require money at precisely the same time. 

A typical millennial household might be juggling mortgage repayments, childcare fees, school expenses, groceries, insurance and transport costs. 

Even households earning well above the national median income can feel financially squeezed. 

The timing is particularly unfortunate. 

Many millennials purchased homes at high prices and with very low deposits, leaving them with large mortgages. Interest rate movements, therefore, have an outsized impact on their household budgets.  

Raising children often means one parent temporarily reduces working hours. At least, that was the plan before household expenses kept rising.

Now both partners work to increase household income. Unfortunately, a big chunk of the additional income gets gobbled up by extortionary childcare expenses. 

This creates a long-term problem: Money spent servicing a mortgage and raising children cannot simultaneously be invested elsewhere.

Career interruptions can also reduce superannuation accumulation, particularly for women. 

Some millennials will eventually inherit substantial wealth from their parents, but these inheritances will most commonly arrive in their late 50s or early 60s – too late to help with the most financially demanding years of family formation. 

Millennials are also the first generation in a while that can be considered financially less well off than their parents – this leaves them with a general sense of disappointment. 

The generation struggling to get started

Gen Z (born 2000-2017, aged 9-26) 

Generation Z faces a deceptively simple challenge – how do you turn a decent income into financial security? 

For previous generations, the formula was relatively straightforward. Finish your education, find a job, save a deposit, buy a home and gradually build wealth. 

Sure, that formula still works for many Australians. For others, high rents make saving difficult.

Property purchases require enormous deposits. Student debts reduce disposable income during the early career years. 

Then there’s artificial intelligence.

Nobody knows precisely how AI will reshape the Australian labour market, but young workers have good reason to pay attention. Many traditional entry-level white-collar tasks are particularly exposed to automation and in a crisis junior jobs are easy to kill off.

If AI reduces the number of junior positions, young Australians could find it harder to gain the experience required to progress into better-paid roles. 

This generation might face a double disadvantage – expensive housing and a less predictable career ladder. 

The uncomfortable reality is that having wealthy parents could become increasingly important in determining who enters the property market early and who remains a lifelong renter. 

The expensive childhood generation

Gen alpha (born after 2018, aged 8 and under) 

Generation alpha doesn’t worry about mortgage repayments or retirement savings because they are babies and primary school-aged kids. Their parents do the worrying for them. 

These children are growing up in an era when raising a family is extraordinarily expensive. Housing costs consume a large share of household income.

Childcare, schooling, extracurricular activities and family holidays compete for whatever money remains. 

Australia’s fertility rate has fallen to historically low levels. We have fewer children, but that doesn’t necessarily mean we’re spending less on them.

In fact, parents may concentrate more resources on each child. The pressure to provide the best possible education, sporting opportunities and experiences can be enormous. 

The biggest financial challenge facing generation alpha isn’t something they can control. It’s the wealth of their parents. 

Children growing up in property-owning families are likely to enjoy substantial advantages over children whose parents rent.

Family wealth increasingly influences where children live, which schools they attend, eventually whether they can afford a home of their own, and how much they inherit.

These aren’t new trends my any means, but they are becoming more pronounced. 

Six generations competing for the same dollar 

Let’s summarise the financial pressures facing Australia over the next decade. 

Three important lessons emerge. 

First, age matters, but wealth matters more. A 35-year-old homeowner with wealthy parents may be more secure than a 65-year-old renter. Generational labels conceal wide inequalities. 

Second, the great intergenerational wealth transfer will not necessarily make Australia more equal. Wealth mostly passes between families that already own assets, while others miss out. Inheritances also arrive late. 

Third, these generational pressures are arriving simultaneously. Young Australians need affordable housing and education, parents need childcare, older Australians need pensions, healthcare and aged care. 

Every generation has legitimate claims on government spending. Meeting them means higher taxes, more borrowing or better services.

Ageing makes this harder – demand for costly services will outpace growth in the workers funding them (that’s last week’s column).  

Yet younger and older Australians are not opposing teams. Today’s gen Z workers will become tomorrow’s retirees – boomers once struggled with mortgages and children. 

The goal is to create a country that offers financial security at every stage of life to as many people as possible. 

boo. Solving one without worsening another will become harder. 

Simon Kuestenmacher is a co-founder of The Demographics Group. His columns, media commentary and public speaking focus on current socio-demographic trends and how these impact Australia. His podcast, Demographics Decoded, explores the world through the demographic lens. Follow Simon on Twitter (X), Facebook, or LinkedIn.