Aussies expect kids to earn well

More than 90 per cent of Australians think hard work and a good education will allow their children to earn middle or high incomes as soon as they reach their 40s, a survey has found.

A quarter of us expect our children to be high-income earners while two-thirds believe middle incomes are more likely for their kids as 40-somethings.

The international survey by Fidelity Worldwide Investment also shows Australians' expectations of their kids' incomes are far lower than in India and China, where 76 per cent and 48 per cent of parents think their kids will be high earners.

The eight per cent of Australians who expect their children to earn a low income most commonly cited a lack of economic opportunities and no financial benefits from the family.

Meanwhile, the survey found that most respondents tipped their own household incomes to improve over the next decade, with only 16 per cent expecting it to worsen.

Fidelity's director of investment communication Betty Ng said lower-income earners tended to overestimate their pay rankings, while those in higher-income brackets would often underestimate their pay status.

"This is important when it comes to investing," Ms Ng said.

"When people in lower-income brackets overestimate their ranking they over-spend and invest too little."

By contrast, higher earners often assume less investment risk than they can tolerate and forgo higher potential returns, Ms Ng said.

Almost two-thirds of Australians also expect the income gap between low- and high-income earners to widen over the next 10 years.

The survey was undertaken in March this year with more than 5000 respondents in 10 cities throughout the Asian region.

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