Falling ‘comfort’ level hurting these key groups

Survey finds two key groups the biggest losers in ‘comfort stakes’.

unhappy shopper

Households across the country are feeling increasingly concerned about meeting monthly expenses as a result of rising living costs. And with further Reserve Bank rate cuts forecast, major retailers tipped to abandon widespread discounting, and fuel costs up 10 per cent in the last quarter, the outlook appears to be unchanged.

The Household Financial Comfort Report, a survey of 1500 Australian households in June, says that ‘comfort’ levels have fallen since the start of the year. It blamed falling property prices, a weakening job market and subdued wage growth.

The households labelled the losers in the comfort stakes were those reliant on the Age Pension and renters. Rental payment stress was reported by 62 per cent of renters, up 11 points in the six months to June 2019.

The winners were households that were not dependent on the Age Pension, those with balances greater than $1 million, and young and middle-aged singles and couples with no children.

The report found that 38 per cent of households were “unable to afford essentials” or had “no money left over afterwards”.

It noted a “lack of awareness and passivity towards superannuation”. Twenty-five per cent of households “either didn’t have a superannuation fund or didn’t know what type of superannuation fund they were in,” and only 17 per cent were actively “building wealth for retirement as a financial goal”.

ME Bank consulting economist Jeff Oughton said financial comfort across most of the 11 drivers that make up the index had fallen.

“The financial comfort of Australian households eased over the past six months, with a significant fall seen in comfort with wealth,” he said.

“Despite lower mortgage loan rates, expected cuts in personal income tax and higher local and global equity prices, this is largely a consequence of continued decreases in the value of residential property in many parts of Australia.”

Living costs were the biggest worry with about 44 per cent of surveyed households saying the cost of necessities was their biggest financial worry. This was followed by worries about the level of cash savings on hand (34 per cent), ability to maintain lifestyle in retirement (31 per cent) and the impact of legislative change (19 per cent).

One in five households reported that they would be unable to raise $3000 in an emergency and about 40 per cent of households said they spent their entire income every month.

The report found significant decreases in financial comfort among working Australians, with 26 per cent of all workers saying they felt insecure in their current job. Australian Bureau of Statistics (ABS) research shows that there has been a 39 per cent rise in the number of unemployed over-65s looking for full-time work, and a 28 per cent rise in those looking for any type of work.

“It’s clear from the latest report that there are increased concerns around job availability and underemployment,” Mr Oughton said.

“The number of workers who felt it would be difficult to find a new job increased by 16 per cent to over one in two employees, which is the highest recorded since late 2016.”

The survey found that a minority of households expected to fund their own retirement.

“Currently, about one out of five households (22 per cent) expect to ‘fund retirement with their own superannuation’ (up one point in the past six months). This is slightly more than an average of 19 per cent since the survey began.

“The number of households expecting to ‘rely on the government pension’ during retirement remained steady at 23 per cent. A further 39 per cent expected to partly fund their retirement with a government pension. Finally, a significant proportion of households (17 per cent) simply did not know how they would fund their retirement.

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    COMMENTS

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    Captain
    13th Aug 2019
    5:07pm
    25% of households do not know if they have a super account or if they do they don't know what type of fund they are in. Also 17% don't know how they will fund their retirement.

    A sad comment on our parenting skills and education system.
    Tanker
    14th Aug 2019
    11:47am
    Why blame the Education system? That is now geared to preparing young people for work instead of preparing them for life. Look to professional educationalists and politicians for that monumental error.
    The young unfortunately live for "the day" and only starting thinking of retirement when it is too late to build a decent super balance.
    KSS
    14th Aug 2019
    1:01pm
    Nothing to do with either parenting or the education system.

    If you have never had a job (or a job paying more than $450 a month) then you wouldn't have a suprannuation account. If you retired before 1993 you may not have a super account either since it didn't exist (at least not in the same form) before then. other than these groups everyone in work would have an account whether they take an interest or not.

    Once people leave the education system and get a job they are given all the superannuation information they need. They just don't read it. You can't blame parents or the education system for that.

    As for the 17% who don't know how they will fund retirement, they only have themselves to blame. There are really only three options: fully fund it yourself, rely wholly on a Government pension, or a combination of a partial Government pension and partially funding it yourself.Can't blame parents or the education system for that either.
    Rosret
    14th Aug 2019
    4:31pm
    KSS I really believe there is a group of people in the population who will always need to be controlled financially by the government. It doesn't always come down to IQ or even income.
    Some people just spend every cent they earn and others have to spend every cent they earn.

    I do know though - a 9% salary contribution on an average income into super doesn't come anywhere near being enough by retirement. Yet we can't increase this % because many families would really would do under.
    tisme
    14th Aug 2019
    10:23am
    ive been a carer for so long ( like so many others I dont have any superannuation either, on the job ( if u pardon the word job as we arent workers ) 24/7. i while looking after a disabled adult daughter cant afford a decent pair of shoes is why im wearing thongs in winter not good with arthritis etc .
    Rosret
    14th Aug 2019
    4:21pm
    Sorry to here it tisme. It is incredibly difficult for a carer.
    However there is no need for you to suffer so badly. Seek out help from St Vinnies or equivalent and see how they can help.
    Rae
    15th Aug 2019
    7:28am
    Your daughters disability pension combined with your carers pension should extend to shoes. If not then as Rosret says Vinnies or the Salvation Army offer help and advice for budgets etc. They even have new shoes in various sizes at very cheap prices.They will give you a pair too if you are destitute.

    It's a very unfortunate situation when needing to care for a disabled relative. It's why there is a safety net for those who can't earn enough to pay for care while they work. The organisations mentioned can and do help hundreds of thousands to manage better and have a better life.

    People do not want to see the disadvantaged go without. Seek help.If the problem is that you aren't getting your entitlements those charities will help sort that as well.
    sunnyOz
    15th Aug 2019
    2:21pm
    Rae, have to agree with you. Wearing thongs in winter? - Go to Kmat/Target/any department store. Get good warm shoes, slippers, boots for less than $10. I am still wearing my fake Uggs that I bought for $8 last year. 80% of my wardrobe is op shop buys, and I am often asked where I get my great outfits from.
    patti
    14th Aug 2019
    11:31am
    Two years ago I was in desperate financial straits with urgent repairs to the house needed. I took out a reverse mortgage, with a small extra payment each month to help out. Two years on, I am struggling to make ends meet even with that extra payment. Better just hope I don't live for too long I guess!!
    sunnyOz
    15th Aug 2019
    2:22pm
    Reverse mortgages can turn out to be more of a hindrance than help.
    floss
    14th Aug 2019
    1:14pm
    And guess who was in power when this all happened.
    Intellego
    14th Aug 2019
    5:56pm
    The LIEBERALS!
    Rae
    15th Aug 2019
    7:41am
    Wouldn't matter floss. This is happening all over the western world as a result of both progressives and conservatives falling into the neo-liberal economic trap. The top are earning 200 times what they did in the1980s and are very happy.

    This type of inequality always collapses. It's inevitable now. Just a matter of time.
    The end of the 1920s had exactly the same issues from the same economic theory.
    We have far more debt now though which will make things so much worse.

    The only clever ones were the Northern social democratic nations with different political systems and voting rights. They also pay hefty taxes for that redistribution and services provision. It makes for a more equal and fairer society but still has issues as people cope with high taxes.

    I honestly think the authorities have no idea what to do, Neither the Government nor the RBA to get us out of the mess.

    Both parties are responsible for the problems we are facing. We are going to have to face the consequences anyway no matter who is to blame.

    Best we can do is understand that food, water, fuel etc prices will rise as the dollar loses value and cut all unnecessary spending to get ready if at all possible.

    I still see pensioners at the clubs, buying lottos, eating in cafes and I think they are very naive.
    Thoughtful
    15th Aug 2019
    2:33pm
    @Rae Too true Rae about people being too naive - not just pensioners
    johnp
    14th Aug 2019
    1:31pm
    Govt has to depress the average retired person otherwise the pollies wont be able to afford their huge salaries, increases, allowances, perks etc. $180 per day meal allowance for pollies, $6 per day for aged care resident !! Australia is one of the lowest countries allocating in percentage terms from GDP to welfare. Starting to feel nauseous about the whole situation.
    GeorgeM
    14th Aug 2019
    4:23pm
    Agree, johnp, this article and the current situation is enough to make any right-thinking person feel nauseous. This is all happening in a country which with it's small population and massive riches in resources (sold-off by politicians to foreigners) should be the richest in the world with people living in prosperity - better than any Middle East country.

    I would vote for any party which would declare a National Emergency and take back ownership of ALL resources (minerals, property, farming & mining land, Utilities assets, Water, etc) and manage these for the benefit of the citizens here.
    Triss
    14th Aug 2019
    6:56pm
    We need some backup, perhaps it’s time to really get through to the over 50s and impress on them how difficult it might be when they stop work if they don’t stop voting in the same money grabbing pollies.
    Farside
    15th Aug 2019
    2:25pm
    The current national circumstances might make you feel nauseous however the cost of funding MPs is a fraction of that spent on retirees. Your other point concerning Australia being one of the lowest countries allocating in percentage terms from GDP to welfare is true and if this was addressed then maybe your nausea would go away.
    johnp
    16th Aug 2019
    12:19pm
    Fair point Farside. However because it is a fraction does not make it right !! The plundering attitude of the pollies can spread esp. among those that can manipulate the system; cos they can !!
    Farside
    16th Aug 2019
    4:39pm
    Don't get me wrong Johnp, I agree the remuneration is not right and if it was cleaned up I suspect few MPs would leave for greener pastures. I was just raising a point concerning the hyperbole. If I had my way then MP pay structure would be transparent, compulsory super contributions would be same as those applied to workers i.e. 9.5% (not the 15-17% that some agencies and departments pay) and conditions for access to super would be the same as applies to any worker, all MP expense claims and accounting for allowances would have independent oversight. All s44 breaches would refund the monies paid to them except for the equivalent of minimum wage. Further there would be no grandfathering of conditions and the terms of engagement would apply to all as at election date.
    Tricky
    14th Aug 2019
    2:07pm
    Not to mention the appaulling 'Deeming Rates' for cash term deposits.
    johnp
    14th Aug 2019
    2:10pm
    agree, also should have universal aged pension, simpler, less bureaucracy and costs for govt as well
    Thoughtful
    14th Aug 2019
    2:56pm
    Actually I do blame parents and our education system. My father knew nothing really and was just lucky he had a job with a defined benefits scheme as he lived to a ripe old age. My mother knows absolutely nothing about finances as per most woman of her generation. Daughters were raised to believe it was the husband's role. ( Yet interestingly those who never married seem to have worked it out themselves )

    My parents taught me nothing except to trust people who appeared successful ( I suppose they considered them examples of their own advice ). I was never taught even the basics of financial management even though I received a pretty high education for my day. This resulted in many bad financial decisions due to lack of knowledge. I rectified this lack of knowledge in my 40's by self-studying.

    The change in the world's economy and the country's social setup should bring about coinciding changes in philosophy but has not. We are still tied by the old rules which no longer apply because nobody has shown us any difference.

    Wake up Australia! Finance should be a core subject in schools.
    Thoughtful
    14th Aug 2019
    2:59pm
    Should read nobody has shown us any different.
    Cowboy Jim
    14th Aug 2019
    4:00pm
    I had financial tuition in primary school, boys also had basic home maintenance lessons and the girls were given housekeeping lessons. Was long ago in Europe but I never had any problems understanding the financial world. We had to be a bit more savvy because everyone had a monthly salary which had to last the distance. All the bills were issued monthly as well. The rent payments ditto. Last time over there nothing was altered apart from everyone having less spending money, maybe because everybody spends a lot on technology (iPhone etc.).
    GeorgeM
    14th Aug 2019
    4:26pm
    Our Education system also does not tell people who owns all the massive resources and assets in this country, and who sold off these stupidly and cheaply to foreigners.
    Thoughtful
    14th Aug 2019
    8:30pm
    We need to teach about financial products. Life is not as easy as doing a budget. People need to know how to research and compare different superannuation, mortgages, credit cards etc. How interest is calculated. What happens when things go wrong. Insurances.

    And NOT just the males. I believe there are at least 50% females in the workforce.

    We have all become so specialized in what we do that general financial survival skills have gone by the board. And then it becomes too easy to blame one political party or another for our own inadequacies.
    Farside
    14th Aug 2019
    11:42pm
    Thoughtful, the problem is not as simple as you not being taught even the basics of financial management, but rather you were not encouraged to develop an enquiring mind and healthy level of skepticism that prompted you to ask questions and seek out the answers when confronted with a topic that you lacked familiarity. Nevertheless, I agree that schools should be doing much more to educate students in economics, personal finance and civics.

    Re your workforce participation comment "The workforce participation rate is 60.6% for women (aged 15 and over) and 71.0% for men (ABS 2019, Labour Force)."
    Intellego
    14th Aug 2019
    5:55pm
    This is exactly what one would expect under an utterly inept Lieberal-Nazional Party government.
    Cheezil61
    14th Aug 2019
    9:37pm
    Funny thing the govt (the majority of people elected) aren't responsible at all? Constantly pushing wages down & looking after big business & always trying to make it harder for hard working population what with 'fair' work Australia/Work Chiices etc (& now trying to make it easier for workers to be sacked!) Not only that but i know of many people locally that have been working their asses of in low paid jobs but their employer has been taking super from their wage but not paying it to the super accounts (ie pocketing it/robbing employees of their super or simply not deducting super even). As well we are penalized now if we pay more than $25,000pa to super in salary sacrifice (not much incentive) so how we meant to afford to go without something else in the basics of household costs to pay more into super? Also risky putting much of our hard earned into super anyway, who says we will get to use it ourselves one day with everyone else from govt to banks, etc wanting to get their hands on as much as possible of OUR super! Losing chunks of it in gfc & downward markets etc is also another risk! What is the answer? Bank interest is stuff all (that's if we have spare money for savings & who actually does have 'spare' money after bills etc. No health insurance & no spare money for my health let alone 'savings' & I'm on a reasonable wage (work hard for it too-rotating shiftwork, 12 hr shifts). Not much hope for workers these days!
    WrinkleBlue
    16th Aug 2019
    10:45pm
    Hi all and just read the comments on commodies and no money for a pair of shoes and honestly astounded to the hardluck stories and renters not in the equation unless they share renting and have a job to make life easier.I am a carer been so for over 30 yrs and work now as a cleaner 30 yrs.My trade was cooking ,nursing assistant in the 70s .My hubby was in a very good well paid job originally and became ill and we deal with cancer u name it and hospital.I worked my butt off and house has no morgage and use to smoke dont now and that takes a fair wack out of a paycheck now.I use to buy my clothes at vinnies ,salvation army and markets good cheap leather shoes.I would save and make craft to sell .I was a homebody and cooked grew my veges ,sewed clothes .Would go out on weekends and hubby chainsaw wood for fire .Yes a pension amounts to zilch when u pay an insurance .We manage fine and having savings no super.Our holidays were camping cheap and affordable.Its a matter of going back to basics no creditcard,no expensive car a used one I have had 13 years now and own it.No smoking and only because its so expensive now to have as a luxury.Im now 64 and children have grown up caring and established in there own right with modern everyday probs not old skill lol.One advice if it still is currant is if you do have a super re being a casual you can take funds from it if you are on a disability pension or carers re its termed hardship.Im not trying to offend or upset anyone by my comments but I have had it tough and made money some how legit and survived.The shitty jobs I have had are always around re cleaning homehelp and pay ok.Surveys pay $2 for 20 mins and add up 5 it buy ur bread for a week.But the vinnies have bread often can be stale so u spray foil with oil put bread in foil brush with milk and close foil in a heated oven comes out fresher than shop.When you do attain a degree of good comfort old habits of surviving never die they stay with you and your children do understand and then life is enriching for all cheers wrinkleblue
    GrayComputing
    17th Aug 2019
    11:52am
    No asset test and universal pensions.
    Our PM and his mates do everything opposite to what their Christian beliefs should tell them to do.
    Following the examples of Jesus is not what the PM does in his politics.
    The PM is not meek and instead is so severely unkind to the poor, the sick and our farmers in drought.
    The P.M and his team is overly fond of giving billions of our money to the money changers (banks) and instead of thrashing them at the temple gates like Jesus did .
    johnp
    17th Aug 2019
    5:12pm
    Agree 100%; Morrison is opposite of a christian !!