David Koch has sparked debate after saying that baby boomers don’t owe their children an inheritance, a claim some have called “silly” and “out of touch with reality.”
Koch, now economic director of Compare the Market, urged fellow boomers to rethink how much wealth they pass on.
“Personally I don’t think you owe your kids any sort of inheritance,” he said.
“While you understandably want to give your kids a big leg up, just remember, your life matters too. Take happiness in buckets, until you kick the bucket.
“You have got to let them work it out. You owe your kids a good education, a stable family life and a good upbringing,” he continued.
“You shouldn’t feel obliged to pass on money before you die, especially if it affects your retirement life.”
Koch also pointed out that compulsory superannuation, now at 12 per cent, means younger generations could retire with more than previous ones.
“Young people today are going to benefit from contribution rates now set at 12 per cent their entire working life. If your kids have good jobs and keep working, they could retire with triple the amount you have.” he said.
“So don’t compromise your retirement and your life just because your kids are putting pressure on you to help them build their own.”
But his comments drew criticism from housing and equity advocates.
Michael Fotheringham from the Australian Housing and Urban Research Institute said Koch ignored the realities of housing.
“It’s not a thoughtful contribution to the discussion about housing affordability,” he told the Daily Mail.
“It ignores boomers as a generation which bought houses at far lower prices over anything experienced by later generations when compared to wage earnings.”
The boomer generation benefited greatly from buying property which was affordable.”
“Most people who are at later stages of life and who have wealth want to share it with their loved ones, they can’t take it with them,” he continued.
“It’s a silly idea really that no one has actually called for and I think he is just trying to stir up controversy.”
Housing equity activist Jordan van den Lamb, also known as Purple Pingers, said Koch’s superannuation argument was “out of touch with reality.”
“I read Koch said younger generations will retire with three times more super boomers had, that’s all well and good, but I’m not sure if he knows how inflation works, more super compared to house prices being 20 times, 30 times, 40 times, 50 times higher, it’s not a great argument,” he said.
Van den Lamb said Koch’s comments could be harmful even if it’s meant for shock value.
“He’s been an incredibly influential person in the media and he still influences public discourse,” he said.
“But I think most people can see he is out of touch with reality.
“Children shouldn’t have to rely on their parents to live but unfortunately that is the way it is. He’s arguing the hoarding of wealth which would be to the detriment of younger generations.”
The issue highlights the growing challenge for younger Australians trying to get into the property market. The typical home now costs more than 10 times the average full-time wage, with median capital city prices hitting $1.091 million.
Over the past decades, house prices have risen far faster than wages, even after adjusting for inflation.
In Sydney, for example, the median home price in 1990 was $187,000, which equals about $447,300 today. By 2010, the average home cost just $600,000, around $874,300 in today’s dollars.
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