Long held up as the land of plenty, it seems this abundance does not always include retired Australians. According to a recently published report, on average, 13.5 percent of people aged 65 plus are living in relative income poverty across OECD countries.
Relative income poverty is defined as having an income below half the national median equivalised household disposable income.
In Australia, that figure has jumped to 35.5 percent. That’s just shy of three times the global average and an increase of 12.3 percent since the last report (refer chart). Despite Australians enjoying a high median wealth, Australians in retirement are not faring as well.
You will find more infographics at Statista
In 20 out of 36 OECD countries, the old-age income poverty rate is lower than for the population as a whole – so what’s going wrong in the lucky country?
That’s what the government’s Retirement Income Review is set to determine. It will examine the three pillars of retirement funding – the Age Pension, superannuation and other savings. This third pillar includes investments outside of super and the equity accumulated in your family home.
Although having to tap into home equity is an anathema to some, there’s no doubt the savings retirees have made in their homes, coupled with growth from capital gains over the years, could transform retirement for many Australians.
The government has already cottoned onto this, with its revamped Centrelink Pension Loans Scheme and downsizing rule. However, for those who don’t want to leave their family home, or need capital as well as income, or simply don’t want to be beholden to the whims of government, other options are available.
Our Household Loan is helping to improve retirements around the country. It may be as simple as funding medical expenses, providing a contingency fund for the unexpected or paying for modifications for the family home to make it safe and comfortable for retirement. Most of our customers use home equity to increase their retirement income so they can enjoy the retirement they deserve.
If you’d like to improve your retirement funding, try our free calculator to see how a Household Loan could transform your retirement.
Applications for credit are subject to eligibility and lending criteria. Fees and charges are payable and terms and conditions apply (available upon request). Household Capital Pty Limited is a credit representative (512757) of Mortgage Direct Pty Limited ACN 075 721 434, Australian Credit Licence 391876.