Income and wealth
Income and wealth are two important concepts in determining a person’s economic resources. Income can be used to purchase goods and services, or saved and invested to increase wealth (ABS 2019). Wealth includes assets such as housing, superannuation, shares, savings and non-financial assets such as cars (Davidson et al. 2020). Generally speaking, incomes increase until around middle age, and wealth gradually increases during working years and is used during retirement (ABS 2019). As a result, in the older years in particular, people can have low incomes but high wealth.
During 2017–18, older people were more likely than younger people to be in low-income households, with 2 in 3 (66%) households with a reference person aged 65 years or over being in the lowest 40% of households as ranked by equivalised disposable income. The average wealth of these older households, however, was 1.5 times that of younger age group households ($1.4 million compared with $0.9 million, respectively). The main reason for this wealth difference is home ownership, with older people having houses of an average value of $597,000 compared with $328,000 for households with a reference person under 65 years (Davidson et al. 2020).
Gross income (or total income) is the sum of income received from all sources before any deductions are removed. Equivalised disposable income refers to income whereby the following adjustments are made:
- Income tax is removed resulting in after-tax income (disposable).
- This disposable income is adjusted down based on the size of the household (equivalised). Note no adjustment is made for lone person households (Davidson et al 2020).
Income support payments
There are a range of government assistance payments available to support older Australians. The most common is the Age Pension – an income support payment for people who have reached Age Pension age (65.5 in 2017, 66.5 in July 2021, increasing to 67 in 2023), are under the income and assets test limits, and are an Australian resident (for at least 10 years). Among older Australians, recipient numbers for Jobseeker Payment, Disability Support Pension and Carer Payment have risen steeply in recent years as the qualifying age for Age Pension continues to increase (AIHW 2021b).
At June 2021, 2.8 million people aged 65 and over received an income support payment, equating to 2 in 3 (67%) of the population aged 65 and over (DSS 2021). Of these older people:
- The majority received the Age Pension (93%, 2.6 million).
- 1 in 29 received the Disability Support Pension (3.7%, 101,800).
- 1 in 50 received the Carer Payment (2.0%, 56,400).
- 1 in 83 received the JobSeeker Payment (1.1%, 30,300) (DSS 2021).
At June 2018, there were 2.6 million older people receiving an income support payment. Of these older people:
- The majority received the Age Pension (95%, 2.5 million).
- 2.8% received the Disability Support Pension (72,600).
- 1.8% received Carer Payment (46,400).
- 0.4% received Newstart Allowance (an unemployment-related payment) (10,600 people) (DSS 2018).
Between March 2018 and March 2021, the number of older people receiving the Disability Support Pension increased by 43% and recipients of the JobSeeker Payment and Newstart Allowance tripled, as the qualifying age for the Age Pension continued to rise. At March 2021, the proportion of the population aged 65 and over who received the Age Pension increased with age, up to age group 80–84:
- 38% for those aged 65–69
- 64% for those aged 70-74
- 82% for those aged 80–84.
For those 85 and over, the proportion dropped to 77% (AIHW 2021b).
Sometimes people need help to meet the cost of housing. Government assistance is available to people on lower incomes, for example those who are renting or saving a deposit for a home purchase.
At 26 June 2020:
- 1 in 5 (20%) income units receiving Commonwealth Rent Assistance had a reference person aged 65 and over, compared with more than 1 in 4 where the reference person was aged 45–64 (27%)*
- 1 in 20 (5.1%) households receiving Private Rent Assistance had a main applicant 65 years and over compared with nearly 1 in 4 aged 45–64 (23%)
- 1 in 10 (11%) households receiving Home Purchase Assistance had a main applicant aged 65 years and over compared with 1 in 3 aged 45–64 (34%) (AIHW 2021a).