Number of retirees on struggle street continues to rise

Almost 40 per cent of recent Australian retirees are struggling to make ends meet

struggle street

Almost 40 per cent of recent Australian retirees are struggling to make ends meet, according to a new report, and a dramatically escalating number of older Australians are retiring with a mortgage.

As Treasury considers the hundreds of submissions to its Retirement Income Review, such reports must also weigh heavily in its consideration.

Submissions from a big number of authoritative organisations, including YourLifeChoices, identify key failings in the current system, including: an inadequate Age Pension rate and rent allowance, a taper rate that does not encourage older Australians to fund their own retirement and an income test that penalises people who wish to continue working past the Age Pension age.

An Industry Super Australia survey – involving 730 industry fund members aged over 47 – revealed that 38 per cent of recent retirees were either living on a very tight budget with only enough for essentials or were not making ends meet – an eight per cent jump from a similar report conducted in 2010.

In 2019, 20 per cent of retirees told Industry Super their ‘golden years’ were not as comfortable as they had expected.

YourLifeChoices’ most recent Retirement Affordability Index, which tracks quarterly changes in retirees’ living costs and is compiled in partnership with The Australia Institute, found that a couple needed $76,208 per year to enjoy a very comfortable retirement and $43,818 for an adequate retirement.

The Industry Super Australia survey found that retirement was thrust on almost 45 per cent of workers and that many Australians nearing retirement were struggling with anxiety, which might explain the increasing number of older Australians retiring with a mortgage.

An MLC report, The Roof over Retirees’ Heads, found that the proportion of homeowners who still have a mortgage as they enter retirement had jumped 23 per cent in a decade to 36 per cent.

Jason Marler, head of actuarial at MLC Wealth, said: “Anyone who is still servicing a debt in their retirement years is likely to have [less money to spend] on living essentials such as food, clothing, utilities, healthcare, transport, travel and other activities.

“Research shows that carrying debt into retirement is one of the key detractors of life satisfaction. Emotionally, owning a home provides an anchor to the community, local activities and relationships.”

Curtin University’s Professor of Economics Rachel ViforJ also urged extreme caution on entering retirement with a mortgage.

“We have a much more volatile economic environment,” she said. “The assumption that house prices are going to go up over time so it’s okay to be carrying debt into retirement is not a wise assumption.”

Yet, an increasing number of retirees are turning their backs on seeking financial advice. In YourLifeChoices’ 2020 Insights Survey, 45 per cent said they had not visited a financial professional to discuss their retirement income – compared with 44 per cent in the previous year and 42 per cent in 2015.

In the 2020 survey, 50.6 per cent said they felt sufficiently financially literate to manage their affairs without professional advice compared with 57.7 per cent five years ago.

Did you enter retirement with a mortgage? Or do you plan to? Do you have high hopes that the government’s Retirement Income Review will deliver effective change?

If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.

RELATED ARTICLES





COMMENTS

To make a comment, please register or login
thommo
5th Mar 2020
10:27am
No wonder retirees are living on struggle street, while ever the stingey Morrison governments screws them, especially age pensioners , by not increasing pension payments. The most recent act of bastardry was when Abbott, Morrison and Hockey changed the assets test as from 1.1.17, (after solemnly promising not to) causing almost a million pensioners to suffer reduced payments or to lose the pension altogether.
They didn't even "grandfather" these changes which made things worse.
These retirees planned their retirement on legitimate criteria, only to have the rug pulled from under them. I for one will never ever forgive or forget them or the LNP for this act of treachery
adbob
5th Mar 2020
10:33am
Correct - but don't forget that the ALP went to the last election with no proposals to change all that - in fact for many they were going to make it worse with their ridiculous franking Credit proposals. Ridiculous because the people targetted (high-value SMSF owners) would easily have sidestepped it but those caught in the crossfire (modest savers) would be more likely to suffer - also just bad politics since the increased tax take would actually have amounted to very little.

Also it was the Greens that enabled the LNP get all that through the senate.

We are political orphans.

What happened to grey power?
Play Fairly
5th Mar 2020
11:54am
Jim Chalmers has given advice about what Labor will do when the content of the Stimulus Package is revealed:-

"If it turns out that it’s insufficient or poorly designed then we have a responsibility to point that out too. Our default position is to do what we can and to work with the government to get Australia through a difficult period"

It is to be hoped that Jim Chalmers is true to his word.  

If the Stimulus Package does not include addressing the needs of ALL poverty stricken Australians (not just the business sector), then a necessary part of the equation is missing.  

It should be pointed out that businesses will continue to fail,  particularly in Regional Centres,  because people have little spare money to purchase much more than the necessities.   

To survive,  businesses need CUSTOMERS with an ability to spend.
Mariner
5th Mar 2020
12:26pm
Yeah, this Government has its faults, and yes, the changes of 1.1.17 were a bastard act. However, need I mention again that the beloved ALP brought in the means and asset test under Hawke and Keating. Before then we had none - so a pox on both the major parties. In these columns the ALP always comes in as Engels, has everyone got short memories?
Eddy
5th Mar 2020
2:42pm
Please Mariner, if you are going to quote history at least get it right. There has been an income and assets test on pension since 1909, although it was called a 'Means' test until 1975. In 1909, using dollars rather than pounds, the mean test to qualify for a pension was less than $52 per year and property valued as less than $600. In May 1975 the Labour (I think it was still Labour in those days) government changed the means test to the Income test and Assets test.
Of course the ways of assessing the income and assets test has changed several times since 1909 but there has always been some form of income and asset tests.
Eddy
5th Mar 2020
2:49pm
ps I meant to include my source in my last response.
https://guides.dss.gov.au/guide-social-security-law/4/10/3
Mariner
5th Mar 2020
4:44pm
Eddy, when working in Melbourne people took out their company super at 65, paid off all debts and sometimes the mortgage of their kids and then went on the old age pension. Try that now!
Mariner
5th Mar 2020
4:46pm
Talking of 1976 to 1983 when a guy called Fraser was in Canberra.
Eddy
5th Mar 2020
11:50pm
Mariner, what you say is true,there were and are people who took their super as a lump sum, blowing it then claiming the OAP, does happen. I also know a couple who took all their super and combining it with the money from sale of their house,bought a 5 bedroom mansion with tennis court and swimming pool. They called it 'estate planning' to preserve their assets for their children and still qualify for the OAP. However it does not detract from the fact that the ALP, under Hawke and Keating, did not introduce the income and assets tests, although the ALP under Whitlam did abolish the means test for people over 75 which was soon rescinded by the following liberal government. Facts are facts
Horace Cope
5th Mar 2020
10:42am
"Did you enter retirement with a mortgage? Or do you plan to? Do you have high hopes that the government’s Retirement Income Review will deliver effective change?"

No, we did not enter retirement with a mortgage. We planned to pay our house off by retirement age and increased our payments to achieve this goal. When we borrowed for our home, the lending institutions granted housing loans that were to be repaid over a set term and redrawing was not even thought of. Any other borrowings for cars, furniture, extensions or any other worthwhile purchase was by way of personal loan over a relatively short term. I can't agree with redrawing on a home loan as this makes borrowing too easy and may be a part of the reason that people are retiring with a mortgage. It could also mean that a borrower is still paying a little bit for everything they bought under the redraw system each month.

I'm not hopeful that any government will make too many changes to the pensions or welfare following the Retirement Income Review. From the figures quoted above it appears that the survey taken was of a very miniscule number compared to the number of people being paid pensions or getting welfare and not indicative of the majority.
older&wiser
5th Mar 2020
12:42pm
I didn't plan to enter retirement with a mortgage, but that choose was taken from me the bully boss from hell who made my last years of working an absolute misery and nightmare. To keep my sanity and health, I walked - I had to, or god knows where I will be. One girl attempted suicide over her treatment (she was also a senior age worker), yet this boss got promote and a bonus.
So unplanned, suddenly no income - some of my super went on keeping the roof over my head. Then onto Age Pension with a mortgage eating nearly 33% of my pension. And I'd always had to do it, all my life, as a single. Yes - if I'd been part of a 'we', then perhaps I wouldn't still have a mortgage, and it is so much harder on a single pension than a couples pension to cover the mortgage and associated costs. Rates, insurance, etc - all the same whether a couple or single, but bloody harder if you are a single.
I don't see this ever changing. I worked hard all my life, no lavish holidays (in fact, no o/seas holidays), small 2 BR house, old model car. I too believe the Retirement Income Review will offer little to current struggling retirees. Will be the usual waste of time, just like so many of the Royal Commissions into Aged Care.
neil
5th Mar 2020
10:52am
No mortgage on retirement, I bought a house in the sticks in Tasmania ages ago. Still a good move. No super though, too old. Pension inadequate for a pleasant life.

Neil.
Play Fairly
5th Mar 2020
12:10pm
Neil, I agree with you wholeheartedly. As Thommo also said in his post, the Aged Pension should be increased. I want to add that all Pensions need to be increased, and Newstart Allowance must be raised considerably.. Everybody's living expenses keep increasing dramatically, yet the last Pension increase was about $5 per fortnight. Crikey, that $5 won't even buy you a juicy steak to cook at home. To buy a nice Lamb Roast you almost need to mortgage the house!
neil
5th Mar 2020
10:52am
No mortgage on retirement, I bought a house in the sticks in Tasmania ages ago. Still a good move. No super though, too old. Pension inadequate for a pleasant life.

Neil.
gr82do
5th Mar 2020
11:19am
Retired with 5 mortgages. Have three left. We have an apartment we love with big strata fee. What we did not expect was the special strata fund being created. One for $40K to remove asbestos. One for $100K to restore sandstone. It may not be enough. The kids know they will inherit a debt. They are fine with that. They will also inherit a desirable apartment to sell.
Spoonbill
5th Mar 2020
12:21pm
The full pension is no more than survival and barely at that. These are people who have worked their whole lives and they struggle in retirement often through no fault of their own. Don't get sick in your old age either and think you are going to get assistance. Unless you have money to pay providers the government funded system is difficult to navigate and get help. The ACAT system isn't just broken it is terminal.
Mariner
5th Mar 2020
12:29pm
Full pension and some superannuation payments should be adequate but NOT when they cancel each other out as it's the case now. Only country in the world doing that.
Spoonbill
5th Mar 2020
12:33pm
It depends on your age and how much super you have. Super wasn't common until about 30 years ago when it was made compulsory so if you did most of your working prior to that, your super wont be what a younger person who retires in 20 years time will be.

All of that is negated though if you get sick as there wont be enough money to pay to get the support you need.
KSS
5th Mar 2020
12:50pm
'Over 47' and 'recent retirees' in thje same sentence! No wonder some retire with a mortgage, that is up to 20 years early!
Curious
5th Mar 2020
1:21pm
Retirement is not for the fain-hearted. When I started working in the late sixties, I could see the inadequacy of the old-age pension system. In the early nineties, I could see the inequity of the superannuation system. The question I asked was, whether the compulsory superannuation system has been designed to replace the OGP. I soon realized that it wasn't. I had to do my best to bring myself up-to-the-mark for the transition to my retirement in early 2002. While the transition had provided me a comfortable retirement in my early sixty years of age, my aging body had surrendered to ill health. Luckily, I had health insurance. My first medical bill was $78,000.00. This didn't include my out-of-pocket medical bill.

In the last twenty years, the economic environment in Australia has changed so much. The GFC has taught us not to trust the banks for our nest eggs. This is confirmed by the last Royal Commission into the Financial Industry. The vicissitude of the sharemarket renders yo rich one day and a pauper on the next day. Political threats to investment incentives had sent retirees and old-age pensioners up the wall in the last election. The big-end of town and governments want our retirement nest eggs through taxes, reverse mortgages, and aged care. If you live in an apartment after down-sizing, you are up for strata levy and special levy. There are no guarantees that your home is safe from unsafe cladding, ingression of water, exposure of life electrical wires, and major structural problems.

This is only a glimpse of why retirees on the struggle street and they are on the rise. I was told the other week, the Australian pension system is the third-best in the World. Here we are. Maybe we should not complain too much??
Chris B T
5th Mar 2020
2:41pm
Mortgage in Retirement is a Oxymoron, and Fails the Responsible Lending/Requesting Test.
Both Lender and Who Requests a Mortgage to go into Retirement, should had given more consideration at the Time of Request of Loan.
Pay it out From Super, before any other Spending.
GrayComputing
5th Mar 2020
3:24pm
NO ASSET TEST FOR A PENSION EVER AGAIN!
What our founding fathers said in parliament in 1908:
Quote:_____

We wish to honour the sentiments of the legislators who introduced the Age Pension in Parliament in 1908. When it became law, it was commended with the following words: “… it removes the idea of old-age pensions from any suggestion of a charitable allowance. An old man, who has done his duty as a citizen for 25 years (is) as much entitled to a pension as a commander-in-chief or a chief justice.”
End Quote: _____

The pension was a reward for service. It should still be considered in this light. It is not a handout.

Therefore, a pension is not welfare.

But modern politicians have stuffed it up completely

It is time to kill off this insane hugely expensive pensioner whacking bureaucracy.

It is time for all of us (yes that means you) to rant at our MPs and Senators daily to take action for human decency and a huge stress reduction for pensioners

Most economist say we will save taxpayers money by dropping asset testing because of the massive overheads cost in running Centrelink and the 10,000 conflicting rules.

Hiring more Centrelink staff will only increase taxpayer’s costs for processing the creeping insane red tape monster system politicians and well paid bureaucrats have created.

Help scrap it now. Become a hero.

Even the UK and poorer New Zealand has a NO ASSET pension, so it is cheaper and user friendly.

Why worry that few million$ earners get it too. That is peanuts to them, not enough for a good vintage champagne.

Do retired and retiring people really look forward and want 100++ visits to/from Centrelink and be hassled by their crazed robo-debt scam and then waste even more time in the 3 million people waiting queues and more lost calls?

We all (that means you) need to tell our MP and senators every day that these criminal asset tests for a pension must be dropped now.

Ask your MP do they really like being part of the system that allows this indirect abuse of the elderly?

This abuse is actually sponsored by our government and forced down to Centrelink and borders on a criminal act.

Why do MPs normally compassionate persons let this Centrelink abuse happen at taxpayers’ expense?

5th Mar 2020
3:50pm
The pension is very generous and I can't see how anyone would struggle on it and if they are they are simply living beyond their means.
Mariner
5th Mar 2020
4:38pm
He who never wants or needs anything always has enough. I would not want to live on the pension alone. Health insurance for 2 is $100 a week, rates and body corp $110 a week, figure it out. In my 70s but still got all my own teeth.
Play Fairly
5th Mar 2020
6:21pm
You must be in perfect health, Retiring Well.

If you have the misfortune to suffer a major illness, be involved in an accident, or your earthly frame is cracking up with arthritis, then it is a totally different scenario.
If you need very prompt treatment in the Private System, (as opposed to very long waiting lists in the Public System, for example for knee & hip replacements), then it will not be cheap to consult Specialists, or to pay them for their surgical expertise. Medicare Rebates are totally out of touch with actual costs for treatment.
Quality of life is very important when you are ageing.
Anonymous
5th Mar 2020
6:40pm
I usually end up in hospital a couple of times a year as a private patient and it costs me nothing. In fact it saves me money as I don't have to pay for food while I am in hospital. Next on the list is cataracts which will cost me nothing in a private hospital

I saw a specialist just last week at no cost as he bulk billed me.

I enjoy a great quality of life thanks to our awesome health system and food supplies.
Misty
5th Mar 2020
10:51pm
I don't know what sort of specialists you see Retiring Well but none I have seen in the last couple of years bulk bill and most of my private hospital stays have left me out of pocket quite a bit, for the first PH stay each year you have to pay a fee of $500.00 so how did you get out of paying that?.
BraveArrow
5th Mar 2020
4:34pm
Try living on 10% of your pre -pension age salary. Its a great and sick joke for those people who pay huge amount of taxes throughout their working prior to retirement, and the government dishes out a paltry amount, whether means or assets tested or not.

Superannuation is also a bad joke in this country; only the financial advisers and the retail superannuation funds with their high fees benefit and they are living very well, thank you. Government taxes 15% in and now they are thinking of taxing 15% on withdrawal - another bad joke.

Agree with NZ pension system of no asset and the pension amount should be increased by at least 20% to bring the aged pensioners to be at least above the poverty level (in the capital cities around Australia.
Anonymous
5th Mar 2020
6:43pm
Super is a great tax sheltered investment with a SMSF. No I'd take my super out before I used a retail or industry fund as their fees are just ridiculous and returns are not great. If they tax super at 15% on withdrwal then it won't be worth having for most people.
Jtee
5th Mar 2020
8:09pm
Own home but put money from inheritance into super for retirement income and lost over $100,000 in the gst. Lost out again when the assets test changed in 2017. Now no confidence in the "system" and in hindsight should have taken a holiday and spent the inheritance enjoying ourselves and buying new furniture and electrical items. We keep our 20 year old cars regularly serviced and have never wasted money and now feel penalised because we put funds aside for our retirement.
Kaz
6th Mar 2020
11:11am
I believe that all government parties don’t care about retirees. When the majority of us started work, we were guarantee a pension after working for 40 years +. The goalposts changed and we were told that there will be no pensions available and you now need a million dollars to retire on. I work in health and a lot of colleagues, like myself are near to retirement and everybody is worried about their future. I still have a mortgage as my husband died and as a self employed tradie, had no super, long service etc due to changes along the way. The government want us all the downsize, but still except us to pay a huge amount of money to do it. Caught between a rock and a hard place
Charlie
6th Mar 2020
9:41pm
Not only are they on struggle street, but there is a huge amount of greed and overpricing for goods and services. There is no more fair go. Everything has to be checked and protested if things are not right. Its getting like my last service to this world.
Play Fairly
9th Mar 2020
9:29pm
Yes, Charlie. I totally agree with all that you have said.


Join YOURLifeChoices, it’s free

  • Receive our daily enewsletter
  • Enter competitions
  • Comment on articles