Home is where the heart is

About 5.5 million baby boomers – people born between 1946 and 1964 – have either reached retirement age or are closing fast.

What do we know about these older Australians – their financial and personal situations, their fears, their aims?

YourLifeChoices’ 2019 Insights Survey – the eighth Insights survey conducted by Australia’s longest established retirement website – reveals much.

Of the 7760 respondents, most (54.5 per cent) were aged between 65 and 74.

Of all respondents, 61.58 per cent were fully retired, 15.31 per cent worked part-time and 10.58 per cent worked full-time.

Of those not yet retired, a surprising 23.97 per cent said they were planning to retire some time after they turned 70, 13.39 per cent at 70 and 15.51 per cent at 65.

The overwhelming reasons for retiring were health (43.64 per cent) followed by the availability of work (24.27 per cent).

Almost one-third of respondents were on a full Age Pension (32.19 per cent), with almost another third on a part-Age Pension (30.64 per cent), while 26.75 per cent were self-funded retirees.

A significant 72.23 per cent owned their home outright, another 14.56 per cent owned their home with a mortgage, while 13.21 per cent were renters. Among the homeowners, there were no plans to change anything soon. When asked if they were planning to sell in the next two years, 90.81 per cent said no. Were they planning to downsize? Another resounding no (83.87 per cent).

However, for all those older Australians with the bulk of their wealth locked in real estate, a key concern was maintaining their current lifestyle as they age. In YourLifeChoices’ 2019 Ensuring Financial Security in Retirement Survey, almost one-third (33.2 per cent of respondents) admitted they were somewhat concerned and 11.77 per cent said they were very concerned about their ability to continue to finance their lifestyle.

In the same survey, YourLifeChoices respondents were asked about the importance of aged care planning. While 62 per cent said it was either important or very important, almost half said they had no idea how much they would need to contribute to aged care.

Which brings us to the importance of the family home – on both financial and lifestyle fronts. In addition to the monetary value of this asset, a significant percentage of older Australians say they want to age at home and – as evidenced by our Insights survey – have no plans to move any time soon.

Many older Australians have made superannuation payments only since it became compulsory in 1992, yet they have also ridden a wave of growth in property values. Their home is their castle, but they also need a reliable income stream.

Credit Suisse’s Global Wealth Report puts the median net wealth of Australians at $271,000 per adult – the highest in the world – but it says that more than a third of our population aged 65-plus are living in relative income poverty in retirement – the second highest rate in the OECD.

While such strategies as the Pension Loans Scheme, reverse mortgages and downsizing may suit, the door is open for other products to release equity in the family home. Watch this space.

This is an edited version of an article that first appeared in the March 2019 Retirement Affordability Index.

Related articles:
Is it too late to invest in property?
Aussies tightening their belts
New retiree assets test this year

Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.