Mid-20s crisis? Nope, it’s just the new prologue to your adult life

Want to know a major influence on our housing markets for the next few decades?

Well…. I believe that demographics drives our property markets and understanding the various life stages is critical to becoming a successful property investor.

However leading demographer Bernard Salt suggests that it’s all changing!

Gone are the days when transitioning into adulthood meant graduating university, landing a stable job, and buying a house by your mid-20s.

Salt suggests that in today’s rapidly evolving world, Australians’ life stages are undergoing a significant transformation with the very definition of adulthood being pushed back to a later age.

According to a recent report in the Australian Financial Review, the neatly segmented life stages of the 1950’s—childhood, adulthood, retirement—have become as antiquated as rotary phones and dial-up internet.

In the 1990’s we had four stages – child (0-12), teen (13-19), adult, (20-64) and old (65-77).

And today Salt reports in the AFR that we have 6 stages:

“The six life stages include childhood (0-12), adolescence, or training, which spans 13-28, before a shortened adulthood of 29-55, a lifestyle period covering 56-64 in which semi-retired or early retired Australians pursue both work and leisure.

Retirement extends from 65-76, and old age comes in at 77.”

This phenomenon can be attributed to a multitude of factors, including:

1. Extended education: With the knowledge economy booming, higher education has become increasingly crucial for securing well-paying jobs.
   This often translates into postgraduate studies and specialized qualifications, delaying entry into the workforce and consequently, the traditional markers of adulthood.
2. Evolving job markets: The traditional career ladder has become less predictable, with many young adults navigating freelance gigs, contract work, and non-linear career paths. This fluidity, while liberating, can also postpone financial stability and major life decisions like homeownership.
3. Shifting societal norms: Societal expectations around marriage, parenthood, and homeownership have relaxed. Individuals are prioritizing personal growth, travel, and experiences over rushing into conventional milestones. This conscious delay allows for a more deliberate approach to life choices.

The implications of this redefined adulthood are far-reaching.

For one, it necessitates a re-evaluation of financial planning.

With later marriage and homeownership, traditional retirement goals will need to be adjusted according to Slat.

His research examined home ownership census data from 1911 to 2021, and found ownership rates had slid from 73 per cent in 1966 to 63 per cent.

Mr Salt said:

“People still want [home ownership], but that 10 per cent gives people freedom to make other choices – to put money into superannuation, to build up a nest egg and to respond to unforeseen circumstances.”

The introduction of a “retired” cohort also speaks to Australians’ growing focus on what life looks like after work, said Mr Salt.

You could make the connection that maybe our [Baby Boomer] generation, and maybe one back, are the first generations to really have to deal with retirement. Our grandparents died at 61, 62 in the 1950s and 1960s,”

The whole idea of retirement planning was not an issue because you died before you actually qualified for the age pension at 65.

So, we’re dealing with new concepts that are moving – there is no frame of reference that goes back 50 years.”

Because of this, the question of how societies and individuals prepare and fund their extended retirements and those of others is a “relatively new” one.

What happens to mid-life crisis?

Furthermore, the concept of a “mid-life crisis” might need to be reframed.

Salt says that with adulthood extended, the period around 40-50 might not be viewed as a time of despair but rather an opportunity for reinvention and exploration.

Individuals can pursue passions, switch careers, or embark on new ventures, capitalizing on their accumulated experience and knowledge.

What about property?

As always, the demographic shifts will drive our property markets.

Millennials entering the family formation stage of their lives and will move out of apartments to homes where there will be enough room for their growing families.

While some may to move to the outer suburbs because of affordability constraints, most Millennials will want to move to the gentrifying middle ring suburbs of our capital cities where there are better amenities including great schools for their growing families.

While their budgets will require Millennials to compromise, one area where they won’t compromise is the number of bedrooms – they will usually be looking for at least three bedrooms plus a zoom room.

This may mean many will look at townhouses as a good compromise for location and space.

And as always, Baby Boomers will be influencing our markets and looking to “right size” into large well-appointed apartments in great locations.

About Michael Yardney
Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He’s once again been voted Australia’s leading property investment adviser and one of Australia’s 50 most influential Thought Leaders. His opinions are regularly featured in the media.