The wealth gap between young people and their parents is widening, according to a new report.

We are often told the reason for wealth inequality is because millennials are irresponsible with money. The old "too much smashed avocado on toast" trope.

But The Grattan Institute's Generation Gap: Ensuring a Fair Go for Younger Australians has found the wealth imbalance is far more complex than that.

The report has landed as the government prepares the terms of reference for its landmark review into retirement incomes, a recommendation from the Productivity Commission as part of its inquiry into the superannuation sector.