Roger Wilkins, University of Melbourne
In Labors budget reply speech, Bill Shorten reaffirmed the plan to remove refundability of dividend imputation credits. His pitch was to Australian voters on lower and middle incomes, in which he pledged to look after the countrys ageing population:
We know that giving older Australians the security and dignity they deserve matters more than an $80 billion corporate tax cut.
The issue of whether or not retirees should be able to get a refund in dividend imputation has sparked considerable discussion of retirees income and wealth.
The Household, Income and Labour Dynamics in Australia (HILDA) Survey shows that, overall, retired people tend to have lower incomes than the population as a whole, but higher wealth. This is because retirement typically involves ceasing employment and reducing income, while wealth tends to accumulate with age, at least up to the point of retirement, mainly due to paying off the mortgage and accumulating superannuation.
The different mix of income and wealth for retired and non-retired households means its not straightforward to compare their economic well-being. For example, the HILDA Survey data show that only 23% of retirees aged 60 and over have above-median incomes (compared with 50% of the population as a whole); but 62% have above-median household wealth.
That said, retirees are generally wealthy if they have both above-median household income and above-median household wealth. With th...