Australians are working longer before retiring, wanting fewer children and spending more on rent and childcare, all while seeing their friendship circles shrink.

That’s the picture painted by the Melbourne Institute’s latest Household, Income and Labour Dynamics in Australia (HILDA) survey, which has tracked nearly 9000 households and 16,000 individuals for more than two decades.

The 2023 results, released on Friday, capture how people are navigating cost-of-living pressures and housing stress, revealing widening gaps between renters and home owners, shifting family choices, and a steady decline in social connection.

Australians earned higher salaries in 2023

As expected, the average household has enjoyed a steady rise in take-home pay during the life of the survey, notwithstanding a decline in 2023 itself.

In 2023, the average surveyed household recorded an after-tax income of $116,432, a 35 per cent rise since the survey began in 2001. The figures are adjusted for inflation.

But the sharp rise in consumer prices over the course of 2023 meant that real incomes were 4.7 per cent lower than in 2022, when households took home an average of $122,200.

Australians spent more on rent and childcare

The survey has asked respondents since 2006 how much money they spend on everyday items.

In absolute dollar terms, households’ single largest expense in 2023 remained their mortgage, with the average responder devoting $12,404 to home loan repayments. The next largest area of spending was groceries, where the average household spent $11,998.

While they were not the largest areas of spending in dollar terms, rent and childcare recorded the largest proportional increase in spending between 2006 and 2023, up 41 per cent and 39 per cent respectively, adjusted for inflation.

The next largest increases were in health insurance (38 per cent), other insurance (32 per cent), education (29 per cent) and meals out (28 per cent).

The largest declines were on children’s clothing, where spending has fallen 29 per cent since 2006 in inflation-adjusted terms, followed by women’s clothing (23 per cent), petrol (21 per cent) and men’s clothing (20 per cent).

The average retirement age increased

The survey shows that more Australians are working well into their 60s and delaying retirement.

In 2003, almost 70 per cent of men and close to half of all women aged 60 to 64 were retired. By 2023, these figures had fallen to 41 per cent and 27 per cent, respectively.

The share of people retiring by ages 55 to 59 also declined sharply, with just 15 per cent of women and 12 per cent of men in that age group saying they had stopped working in 2023.

Report co-author Dr Kyle Peyton said retirement delays reflected a mix of economic and policy factors.

Since 2003, the average pension age has increased from 62.5 for women and 65 for men to 67 for everyone.“

That shift alone means many older Australians have needed to stay in the workforce longer, especially those who can’t afford to retire before becoming eligible for the pension,” Peyton said.

“At the same time, improvements in health at older ages mean that more people are physically able to keep working later in life.”

About 29 per cent of respondents in the 2023 survey cited health as their main reason for retirement, down from 39 per cent in 2003.

“Despite this decline, health remains the most frequently cited reason for retirement in 2023, highlighting its continued importance in shaping workforce exits,” Peyton said.

The proportion of Australians citing financial consideration as their main reason for retirement has doubled to 20 to 25 per cent since 2003, as superannuation has enabled people to become more comfortable stopping work.

Retirees were wealthier than ever in 2023

Housing status remains a critical feature of financial comfort in retirement.

Retirees who owned their home outright had an average superannuation balance of $500,109 in 2023. This cohort saw their total wealth increase to $1.66 million in 2023 from $1.32 million in 2015, adjusted for inflation.

But Peyton said retirement was becoming a two-tiered system. The proportion of retirees who rented rather than owned roughly doubled over the past 20 years to 12 per cent.

“Home owners tend to enter retirement with substantial financial security, while retirees who rent are far more exposed to housing stress. This group of renting retirees is only likely to grow,” he said.

The average retiree living in a private rental has just $277,132 in super.

“While renters and those in other housing arrangements tend to retire at slightly younger ages than outright home owners, they often face markedly different socioeconomic circumstances.

“These include lower and more unstable incomes, higher housing costs relative to income and limited access to the wealth-building benefits of home ownership. Unlike home owners, they do not accumulate housing wealth through mortgage repayment, which increases equity, or through capital gains as property values rise.”

Are Australians having fewer kids?

Australians are gradually souring on the idea of having big families, reporting they would like fewer children than their parents’ generation.Between 2005 and 2023, the average number of kids desired by men fell from 2.22 to 1.99. For women, the figure declined from 2.35 to 2.09.

The decline in fertility intentions coincided with a fall in the actual fertility rate, which hit a record low of 1.5 births per woman in 2023, according to the Australian Bureau of Statistics.

While most survey respondents still said two kids was their desired family size, report co-author Dr Inga Lass said there had been a rise in the number of people preferring either one or no children.

“Potential parents are growing more concerned about their financial security and the costs of raising a child, and that pragmatism is outweighing the emotional side of the decision,” Lass said.

About four-fifths of men and women cited the cost of raising kids as either an important or very important factor determining whether to have a child.

Is the average Australian becoming lonelier?

Australians are becoming more isolated, particularly since the pandemic, with smaller networks and fewer social outings.The survey asks respondents whether they agree with the statement “I seem to have a lot of friends” on a scale of one (strongly disagree) to seven (strongly agree).In 2023, the average survey response was just 4.1, down from 4.6 in 2010.

About 42 per cent of Australians reported a score of 5 to 7 on the scale, meaning they tended to agree they had many friends, while 35 per cent disagreed with the statement.

The sharpest decline in friendship quantity between 2001 and 2021 was among people aged 15 to 24, though young people still report having more friends than older age groups.

Lass said not only did Australians feel like they had fewer friends, they were also socialising less frequently than in 2001.

“The proportion of people meeting friends or relatives several times a week or more often dropped by more than 12 percentage points, from about 32 per cent to 20 per cent,” Lass said.