The Stats Guy: We are getting richer (sort of), older (rapidly) and lonelier (definitely)
Australians are feeling poorer now despite 20 years of gains, writes our resident Stats Guy. The reason for that is simple.
Every year, one dataset gives us a uniquely human look at how Australia is changing.
It doesn’t just measure dollars, jobs or households, it follows real people over time, showing how life actually unfolds.
That dataset is HILDA (a rather forced acronym for the Household, Income and Labour Dynamics in Australia survey).
HILDA, run by the Melbourne Institute since 2001, tracks the same households year after year. That makes it a rare longitudinal study in a world full of one-off snapshots.
It captures how life events ripple through finances, wellbeing, and behaviour over time.
For policy makers, investors, and planners, this is gold. For the rest of us, it is simply good fun to learn how the country is changing.
This week’s column looks at the structural economic forces behind six major societal shifts.
Australians are earning more, but feeling poorer
On paper, Australians have never been richer. Real household incomes are 35 per cent higher than in 2001. Yet in 2023 (the last year we have published data for) incomes went backwards because inflation outran wage growth. We hadn’t experienced this in a generation.
Australians are feeling poorer now despite 20 years of gains. The reason for that is simple. Life is lived in today’s prices, not in long-run averages.
While people have more money, they also face higher costs in categories they can’t avoid – housing, insurance, childcare.
Households can cut streaming subscriptions or buy the cheaper brand of cereal, but they can’t cut rent. They can’t switch to a lower-fee childcare service with the same ease they switch to a cheaper phone plan.
There is a psychological element too. After three decades of falling interest rates and cheap imports, Australians developed an expectation that everyday life should gradually get easier.
The inflation shock of the early 2020s reversed that trend, creating a kind of economic whiplash.
The HILDA data shows that people aren’t just grumpy.
Households are relatively pragmatic financially and adjust spending patterns when needed: they dine out less frequently, delay or shorten travel, or cancel subscriptions. That is genuine, not imagined, cost-of-living pressure.
Essential costs are skyrocketing
The data makes clear that rent and childcare are the two categories putting the biggest strain on households. These aren’t just price stories but demographic stories.
Childcare costs are rising because demand is rising.
More women than ever are in the workforce (by economic necessity, more than by choice), smaller family size means fewer potential unpaid carers are available and work patterns often require formal care. Care work also can’t be automated and wages in this sector rightly need to rise.
Rent pressures are driven by strong population growth colliding with the slowest construction cycle in a decade. Household sizes are shrinking, so we need more dwellings per 1000 residents.
Insurance is becoming more expensive because more Australians live in climate-exposed regions and because extreme weather events are now more frequent and more costly. Also, high houses prices mean the replacement cost of a home after a fire or some other misfortune is unnecessarily high.
Families are also pressed for time and increasingly buy time by purchasing meal kits, hiring cleaners and spending money on after-school care to be able to work longer hours.
The rise in convenience spending is really a rise in time poverty but results in higher spending all the same.
Australians are working later into life
One of the starkest shifts HILDA captures is the collapse in early retirement.
Twenty years ago, most Australians exited the workforce between 60 and 64. Today far fewer do. Four forces drive this:
- Government policy moved the pension age to 67.
- People live longer and remain healthier for longer
- Cost-of-living pressures make retirement more expensive and many low-income earners simply must work for longer to afford retirement.
- For many, work provides (besides an income) identity and community.
This can be interpreted as good news for public coffers, but it masks deeper issues.
Many Australians simply do not have the super balances required for a long retirement. Relying on older workers to fill labour shortages is a demographic warning sign: We should be preparing for workforce shrinkage, not assuming endless labour supply.
For younger workers, the picture is mixed. Competition for senior roles rises but so do mentoring opportunities. Longer working lives also delay the downsizing phase of the housing cycle. This slows down housing turnover.
Retirees are wealthier but the gap is widening
HILDA shows that outright homeowners retire with an average wealth of $1.66 million. Renters retire with a fraction of that.
This is now the defining class divide in Australia. A two-tier retirement system is emerging.
On the one hand are homeowners who use super and home equity to self-fund their retirement. On the other hand are retired renters relying heavily on the age pension plus rent assistance. The payouts for these supports have not kept up with market rents.
This divide shapes everything – political preferences, intergenerational transfers, health outcomes and even how long people work.
Homeowners retire earlier and more comfortably. Renters work longer and still face poverty. The children of homeowners will be better off as they inherit (part of) homes eventually.
It’s a demographic certainty that more retirees will rent in the future. That creates long-term fiscal pressure, because our retirement income system was designed in an era when homeownership in retirement was the norm.
Superannuation is meant to pay for your retirement, but a low-income worker will not accrue enough money in their super to fund their full retirement. Expect this to become one of the big political debates of the 2030s and 2040s.
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Fertility intentions are falling
HILDA reaffirms what Australian Bureau of Statistics data has been showing for a while: The desire for larger families is falling.
There are three main reasons for this:
- Costs for housing and childcare are freakishly high
- Gender equality – the clash between women’s career trajectories and parenting expectations drives down births
- Lifestyle – more years spent in educational institutions and later partnering lead to delayed first births – this leaves little time for second or third births.
Values matter, too. Parenthood is no longer the default identity it once was. Young people are told a variety of narratives that allow for a socially acceptable life without becoming a parent.
Is Australia drifting toward a demographic profile like Japan or South Korea? Not exactly, but the trajectory is similar – high housing costs, long commutes, intense urban concentration.
A big demographic difference is that Australia can offset low fertility with skilled migration.
Still, low fertility reshapes demand. More one- and two-person households, more small dwellings, more workforce shortages in care and education, and a tax base increasingly strained by the rising cost of ageing.
Pro-natal policies have been proven to be expensive and utterly useless in creating fertility increases. The best levers to drive up births remain free childcare, generous parental leave, cheap housing and, most importantly, a sense of optimism about your own future and about the economic future of Australia.
Peter Costello’s baby bonus wasn’t responsible for the mini baby boom around 2008 – that little spike was solely due to the mining boom.
Loneliness is rising (especially among the young)
Perhaps the most quietly troubling finding in the HILDA report is the rise in loneliness. Australians report having fewer close friends and less frequent social contact.
Young Australians show the steepest drop. They have vast digital networks but fewer in-person relationships.
Social media increases comparison stress and reduces confidence to form deeper connections.
Loneliness has real economic consequences:
- Poor mental health
- Lower productivity
- Higher health-care costs
- Reduced civic engagement
Businesses feel this, too. Loneliness reduces collaboration and creativity. Yet it might also fuel growth in co-working spaces, social fitness activities and community-oriented hospitality.
In the property market, loneliness is driving demand for walkable neighbourhoods, third places and build-to-rent models with shared spaces. The 15-minute city isn’t a planning fad – it’s a social health response.
In summary, the latest HILDA data shows a country in transition:
- Richer, but feeling poorer
- Working longer, but retiring more unequally
- Having fewer children, but not only by choice
- More connected digitally, but less connected socially
Australia isn’t standing still. Our big challenge is to ensure economic gains translate into improved wellbeing.
If we want a prosperous future, we need to understand the human stories behind economic statistics.
That is exactly what the HILDA data gives us and why it remains one of the most important datasets in the country.
Simon Kuestenmacher is a co-founder of The Demographics Group. His columns, media commentary and public speaking focus on 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.
