A financial journalist is calling for Boomers to stump up more cash when it comes to paying for their own aged care, saying it is “high time” those born between 1946 and 1964 started paying their way.
Adam Creighton wrote for The Australian that older, asset-rich Aussies should contribute more to the aged care system to relieve the burden on the younger generations, which are not as wealthy and aren’t using the aged care benefits yet.
“The torrent of public money sprayed at residential and home care providers — more than $18 billion this year and rising rapidly — isn’t sustainable without crushing increases in income tax on younger generations,” Creighton wrote.
“If those generations aren’t resentful yet, just wait until the baby boomer generation — the richest in history — starts turning 80 en masse across the next decade and costs go through the roof. It’s time to ask whether the 6 per cent share of aged-care costs users pay is fair. Taxpayers stump up the rest — including the unlucky 7 per cent of today’s 25-year-olds who, statistics insist, will never reach retirement age.”
However, Creighton also acknowledged that it won’t be easy to impose extra costs on what he describes as “the most politically powerful group in society” but questioned why families with fewer assets, or those who do not reach old age, should cover the costs for aged care services now.
He added: “In fact, allowing family assets to contribute more to the cost of aged care in an era when living to 90 is common will probably be the 21st-century version of estate taxes, among the fairest and most efficient form of taxation.”
Unlike those in their 20s and 30s today, Boomers entered an accessible property market and enjoyed years of strong property price increases while paying off their mortgages. Unlike the younger generations, many Baby Boomers are asset rich and own their own homes outright – a concept that is something of a pipe dream to many Millennials and Gen-Xers who can’t afford to make the leap onto the property ladder.
They have also ridden the highs and lows of the share market, as the first generation to have compulsory superannuation, introduced in 1992, added to their financial portfolio.
It’s made Baby Boomers far richer than previous generations, and a study of 2,000 people, which was carried out by Westpac earlier this year and looked at home ownership and inheritance issues, revealed that they are financially secure as a generation.
“Inter-generational equity is defined as ‘the average amount of time a generation has access to potential wealth via inheritance from the immediately preceding generation’ and Baby Boomers are expected to be the demographic that will have greatest access to it,” Andy Wright, Westpac’s home ownership spokesperson, said.
“This could lead to the mounting social expectation for Baby Boomers to share this wealth with their children and even grandchildren, thereby pressurising them into abstaining from enjoying life post-retirement. Yet at the same time, it can be viewed as an opportunity for them to help their children achieve the great Australian dream of home ownership.”
The findings also revealed that the majority of Boomers opt not to downsize their homes as they said they were keeping a firm hold on their greatest asset, as they expected to rely on it to fund their retirement.
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