Columnist for The Australian Financial Review David Leyonhjelm recently in an article, ‘Home Truths on Pension Entitlements’, stated that baby boomers are currently engaged in parasitic behaviors on future generations.

Now his argument around that statement was that baby boomers who are currently entitled to the age pension as a result of the eligibility criteria set by the federal government needn’t classify their family home as being part of their pension asset test. What that means is that there are individuals out there who currently are sitting within family homes that are valued in excess of a million dollars who could still possibly be eligible for the pension.

Now the problem with this thinking is that David pointed out that the current criteria is covering a $6.3 billion funding for people who fall within this bracket, but he didn’t take into consideration the market forces that contributed to them arriving at this position. And he stated that it ought not be the responsibility of taxpayers who oftentimes are in a position where they don’t even own their own house to fund these pensioners. Now, perhaps if we take into consideration that for many of these baby boomers, back in 1980s, let’s say they purchased their family home back then pursuing the Great Australian Dream, the median house value in say, Sydney, was set at less than $65,000, whereas in Melbourne it was less than $40,000.

Now, fast-forward to 2019, due to market forces, capital growth, things that are outside of the control of the individual, median house prices have risen in 2019 in Sydney to over $880,000, in Melbourne, it’s over $650,000. And many of the family homes that these individuals purchased in areas that perhaps may have been considered lower socioeconomic back in the ’80s, but due to gentrification, etc., are now sitting in areas that are some of the most highly sought after postcodes in those major capital cities.

Now, should those individuals who perhaps are now sitting in homes that are worth a million, a million and a half, be forced to sell their family home to fund their retirement, to fund their later years, or perhaps should we look at an alternate solution to this? Perhaps if it was Mr Leyonhjelm’s own mother who was forced to sell her family home in order to fund her retirement, his tune may be different.

Perhaps the real opportunity here is for us to provide a greater level of education, bringing higher levels of financial acumen to our youth in order for them to be able to sustain themselves in later years.