The demographic storm about to hit Australia

GUEST OBSERVATION

Six years ago McCrindle Research (one of Australia's leading research houses) predicted that by 2020 the Australian population would reach 24 million. At the time - 2008 - our population was 21.4 million.

Based on the Australian Bureau of growth statistics (2013), we're growing by:

• one birth every one minute and 42 seconds,
• one death every three minutes and 34 seconds,
• a net gain of one international migration every two minutes and 14 seconds, leading to
• an overall total population increase of one person every one minute and 20 seconds.

As I write this article in August 2014 Australia's population sits at 23.5 million (abs.gov). If my calculations are correct, we're growing by 395,188 people every year. By New Years Eve in 2020, we'll add another 2.371 million people to our population. Last time I checked ... 23.5 million plus 2.3 million equals 25.8 million.

We'll be 10% bigger at almost 26 million people. By 2020 we won't just reach 24 million - we'll have enough new blood to add another Adelaide, Hobart, Darwin, Canberra, Townsville and Cairns into the mix!

It's just "numbers" you say, but take note - these "numbers" will have a massive effect on the Australian economy and the thousands of property markets across Australia.

As the federal government has recently signalled - adding salt to the wound will be our ageing population; lots of significantly older adults.

Around 200,000 people reached 65 years of age in 2011. Between January 2012 and December 2020 another 5.4 million will join them. That little fact may not mean much today - but with Baby Boomers exiting the workforce in large numbers, we're staring down the barrel of a lot more people and a lot less tax payers.

A bit more research (another McCrindle report) revealed that in 2012 the median age was 38. They also predict that in 2050 our median age will be 43. We're growing older and living longer.

The double-edged sword? We're also losing our kids to the 'global village' - what we read about at university back in the 60s and 70s, they now live in. Our younger generations grow up, study, possibly received government funding or HECS support to gain their qualifications and leave our shores in increasing numbers to work in others countries.

In 2012, a reported 257,258 Australians left the 'lucky country' permanently - a quarter of a million Aussies said goodbye!

When I sat my HSC 42 years ago we didn't have pocket calculators - they weren't available in Australia. "How the times they are a changing"

I know at least some of these kids found that international job on their mobile device, accepted the offer, negotiated their remuneration package and booked their flights the same way. Leaving without a second thought.

The undeniable challenge we must now address is that we have a mass exit at the top of the age scale, a significant one in the lower age bracket - and the people in the middle are going to suffer. Your retirement age has already been increased to 70 years of age.

What's next then?

This is what's next, and it's a real eye opener. In 2013, only four percent of Aussies over the age of 65 years were self-funded retirees.

What the? 96% of people over the age of 65 were either reliant on a tax-payer funded pension, still working, or deceased. And as I said earlier, with the Boomers exiting the workforce in large numbers, we're staring down the barrel of a lot less tax payers to fund those pensions.

If people in the middle age bracket (38-55 years of age) don't take control of their financial futures right now, they really won't have much to look forward to in retirement.

If you're in that middle group and you're 'stuck'; unsure of how to shape your financial future so you can see the retirement you want and deserve, then you need to invest in your financial education now.

By developing your financial education, you'll create the ability to identify opportunities to help maximise your income and asset potential, and in return create a passive income in retirement.

Kevin Lee is the property investment expert and buyer's agent at Smart Property Adviser.