LIFE CYCLE STAGES
A typical life cycle includes childhood, early adulthood, and the forming and maturing of families. As people progress through different life cycle stages and their family structures and financial situations change, so do their income and housing needs. The life cycle stages illustrated in Figure 6.4 provide a simplified view of life cycle possibilities and show both how incomes are distributed across the stages and how these incomes change when net imputed rent is included. Some household types, such as lone persons aged 35-65 years, are not included in this sequential analysis.
The tenure of a household is strongly related to life cycle stages, generally following a pattern of renting in early adulthood, moving to home purchase with a mortgage as partnerships are formed and children are born, and owning the home outright in older age. These relationships are reflected in the comparisons in the graph below of the mean equivalised disposable household incomes of selected life cycle groups with and without net imputed rent.
6.4 Mean equivalised disposable household income (EDHI), WITH AND WITHOUT IMPUTED RENT, BY SELECTED LIFE CYCLE GROUP, 2005-06
![Graph: 6.4 Mean equivalised disposable household income (EDHI), WITH AND WITHOUT IMPUTED RENT, BY SELECTED LIFE CYCLE GROUP, 2005-06](/ausstats/abs@.nsf/bb8db737e2af84b8ca2571780015701e/0c297c2bc991c0f5ca25743b00162d9c/Body/0.6C4!OpenElement&FieldElemFormat=gif)
The inclusion of net imputed rent in income saw mean equivalised disposable household income increase in all life cycle groups except for young couples without children (with reference person aged under 35 years), and couples with dependent children only with an eldest child under 5. These two life cycle groups also had very low incidences of full home ownership.
Conversely, the largest increases in mean equivalised disposable household income, with the inclusion of net imputed rent in income, were seen in lone persons aged 65 years and over and couple only households with the reference person aged 65 years and over. These households also had the highest incidence of full home ownership at 86% and 74% respectively and the lowest incidence of mortgages on their own home (6% and 3% respectively).
The relative ranking of life cycle groups in the income distribution also changes with the addition of net imputed rent to income. Table 6.5 shows the proportion of households in each income quintile, by life cycle group, before and after the inclusion of net imputed rent.
6.5 Life cycle groups, by income quintiles, with and without imputed rent, 2005-06 |
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![](/icons/ecblank.gif) | ![](/icons/ecblank.gif) | Lowest | Second | Third | Fourth | Highest | Total | Second and
third deciles | ![](/icons/ecblank.gif) |
Equivalised disposable household income - quintiles | ![](/icons/ecblank.gif) |
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Lone person under 35 | % | 18.8 | 10.7 | 25.3 | 23.8 | 21.5 | 100.0 | 10.1 | ![](/icons/ecblank.gif) |
Couple only, reference person under 35 | % | *4.4 | 5.7 | 13.3 | 31.9 | 44.8 | 100.0 | 5.2 | ![](/icons/ecblank.gif) |
Couple with dependent children only, eldest child under 5 | % | 6.5 | 22.0 | 24.7 | 27.2 | 19.5 | 100.0 | 11.6 | ![](/icons/ecblank.gif) |
Couple with dependent children only, eldest child 5 to 14 | % | 13.5 | 22.8 | 25.6 | 20.7 | 17.3 | 100.0 | 18.7 | ![](/icons/ecblank.gif) |
Couple with dependent children only, eldest child 15 to 24 | % | 15.7 | 14.6 | 25.5 | 24.0 | 20.1 | 100.0 | 12.3 | ![](/icons/ecblank.gif) |
Lone parent with dependent and non-dependent children only | % | 39.4 | 29.0 | 17.4 | 8.7 | 5.5 | 100.0 | 36.6 | ![](/icons/ecblank.gif) |
Couple with dependent and non-dependent children only | % | 7.8 | 18.0 | 19.1 | 32.7 | 22.4 | 100.0 | 15.4 | ![](/icons/ecblank.gif) |
Couple with non-dependent children only | % | 9.5 | 15.9 | 18.6 | 25.8 | 30.1 | 100.0 | 9.1 | ![](/icons/ecblank.gif) |
Couple only, reference person 55 to 64 | % | 20.4 | 16.7 | 17.8 | 18.3 | 26.8 | 100.0 | 18.9 | ![](/icons/ecblank.gif) |
Couple only, reference person 65 and over | % | 46.7 | 29.7 | 12.0 | 5.8 | 5.8 | 100.0 | 51.6 | ![](/icons/ecblank.gif) |
Lone person, 65 and over | % | 67.1 | 18.8 | 6.7 | 4.0 | 3.5 | 100.0 | 32.7 | ![](/icons/ecblank.gif) |
Adjusted equivalised disposable household income, incl. imputed rent - quintiles | ![](/icons/ecblank.gif) |
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Lone person under 35 | % | 17.8 | 17.0 | 19.5 | 26.6 | 19.1 | 100.0 | 10.8 | ![](/icons/ecblank.gif) |
Couple only, reference person under 35 | % | 6.3 | 7.7 | 14.2 | 33.3 | 38.5 | 100.0 | 5.4 | ![](/icons/ecblank.gif) |
Couple with dependent children only, eldest child under 5 | % | 13.3 | 20.2 | 24.2 | 26.5 | 15.8 | 100.0 | 17.7 | ![](/icons/ecblank.gif) |
Couple with dependent children only, eldest child 5 to 14 | % | 19.6 | 22.3 | 22.5 | 19.2 | 16.3 | 100.0 | 18.9 | ![](/icons/ecblank.gif) |
Couple with dependent children only, eldest child 15 to 24 | % | 17.6 | 13.6 | 25.3 | 21.8 | 21.6 | 100.0 | 13.2 | ![](/icons/ecblank.gif) |
Lone parent with dependent and non-dependent children only | % | 42.4 | 27.4 | 15.9 | 9.1 | 5.3 | 100.0 | 37.2 | ![](/icons/ecblank.gif) |
Couple with dependent and non-dependent children only | % | 15.5 | 10.8 | 21.6 | 28.3 | 23.7 | 100.0 | 12.5 | ![](/icons/ecblank.gif) |
Couple with non-dependent children only | % | 8.6 | 12.1 | 21.9 | 24.2 | 33.1 | 100.0 | 10.7 | ![](/icons/ecblank.gif) |
Couple only, reference person 55 to 64 | % | 14.5 | 17.8 | 15.1 | 21.7 | 30.9 | 100.0 | 16.4 | ![](/icons/ecblank.gif) |
Couple only, reference person 65 and over | % | 28.1 | 37.0 | 17.2 | 10.2 | 7.5 | 100.0 | 41.1 | ![](/icons/ecblank.gif) |
Lone person, 65 and over | % | 34.4 | 37.3 | 16.0 | 7.0 | 5.3 | 100.0 | 42.9 | ![](/icons/ecblank.gif) |
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* estimate has a relative standard error of 25% to 50% and should be used with caution |
The proportions of lone persons aged 65 years and over and couple only households with the reference person aged 65 years and over who were in the lowest income quintile both decreased significantly when net imputed rent was added to income. For lone persons aged 65 years and over, the proportion of households in the lowest income quintile decreased by about half (from 67% to 34%). For most other life cycle groups, the proportion who were ranked in the lowest income quintile increased following the addition of net imputed rent.
At the other end of the income distribution, the proportion of younger life cycle group households who were in the highest quintile decreased, i.e. lone persons under 35 years of age, couple only households under 35 years and couples with dependent children only, where the eldest child was less than 15. The proportion of most other life cycle groups in the highest income quintile increased.