Report reveals the retirees facing the greatest disadvantage

Font Size:

A new report released by the Centre of Excellence in Population Ageing Research (CEPAR) this week concludes that those at greatest disadvantage in retirement are renters, with relative poverty rates in this cohort among the highest in the OECD.

The report, Housing in an ageing Australia: Nest and nest egg?, finds that there have been delays in home purchase in the population but that these are consistent with other social and demographic trends.

“Homeownership serves multiple purposes and housing outcomes affect financial and personal health and wellbeing over the life cycle,” said lead author Rafal Chomik. “It acts as a home – the nest – as well as a store of wealth – the nest egg – to guarantee financial security in retirement.

“As lifespans increase and Australia’s population ages, it is important to understand the interactions between demography and housing.”

Professor John Piggott from the UNSW Business School explained that Australia’s homeownership is critical to a comfortable retirement.

“Housing has long been a critical pillar in wellbeing and social support through the life course,” Prof. Piggott said. 

 




“One way or another, it has always been a central piece of our social support system. It is at least arguable that our social protection system has relied on a high owner-occupier ratio in order to function sustainably and adequately.”

With the Australian retirement system built on the premise of homeownership, excessive or indefinite deferral of home purchase can have consequences.

“Lifetime homeownership rates will decline if some people postpone purchasing a home indefinitely,” said Mr Chomik. “Banks may be reluctant to lend past a certain age, given retirement ages are increasing more slowly.

“There is the potential that in the future more older people end up renting and, if so, we need a safety net to support them as the current retirement income system is failing renters,” he said.

“Currently, the Age Pension offers the same maximum benefit for owners as it does for renters. The government’s retirement income system review, due to report next year, is an opportunity to take housing into account more fully with the aim of narrowing the financial gap between renters and owners in the future.”

The report outlines some of the challenges associated with people postponing their home purchase indefinitely and looks at how it may lead to vulnerabilities at older ages, including relative poverty, housing affordability stress and, in the extreme case, homelessness.

New estimates, that take account of housing, suggest that older Australian renters have among the highest relative poverty rates in the OECD. They also have greater rental affordability stress than other age groups.

While increases in measured homelessness among older women were due to greater numbers in this age group rather than higher incidence, their increased use of homelessness services was disproportionate.

Does the government need to do more to look at narrowing the gap between renters and homeowners in the future? What can be done to ensure renters are not left severely disadvantaged by the pension system?

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

Join YourLifeChoices today
and get this free eBook!

Join
By joining YourLifeChoices you consent that you have read and agree to our Terms & Conditions and Privacy Policy

RELATED LINKS

Many retirees fail to consult their partners in planning

A large number of retired Australians are independently navigating their way through their retirement

How to survive in a low rate environment

If you have your retirement savings in a term deposit, chances are you're watching your income

Stability, integration the keys to improving retirement system

What's wrong with our retirement income system? Plenty, says Michael Rice.

Written by Ben

73 Comments

Total Comments: 73
  1. 0
    0

    The government could look at the anomaly when it comes to retirement villages. When it comes to retirees who pay to enter a village where they do not own their unit only a lease or licence to occupy, Centrelink classifies them as a home onwer and therefore prohibits rent assistance. Whereas in a village where a retiree purchases outright ownership of a unit but pays a rental for the land to place it on Centrelink allows rent assistance. Go Figure!

    • 0
      0

      Those places are shocking rip offs. Why should you pay rent on the land plus the extra costs they normally charge. You might as well rent outright elsewhere. You are looking at $300 to $400 a week. Highway robbery!

    • 0
      0

      Rent assistance is a fraction of that at about $65 whether a single or a couple so they are still left with a huge amount to pay.

  2. 0
    0

    Der, yes, of course renters are the poorest. They have no assets not even a home.
    It is going t get worse too because so many people in their fifties, forties and younger cannot afford a home. Some have lost their home through divorce or illness or never managed the deposit. Once older, they cannot get a loan anyway. Paying rent all their lives keeps them poor. Some will have super but not enough most likely to purchase a home.
    Our children and grandchildren will be poorer than we are mot likely unless something is done about house prices and equality.

    • 0
      0

      While home ownership looks a long way off or even impossible for many young and middle aged, their time will come as they inherit assets of parents and more elderly put their homes on the market to move into communities or aged care.

    • 0
      0

      Farside, you assume people have heaps to leave their children. Maybe if you had one child they may manage a home from the proceeds of your estate. Also, some pensioners have zero assets, no home, no cash, zilch!
      Future pensioners are going to be worse off than their home owning parents.

    • 0
      0

      I won’t be able to afford to buy a house once I get inheritance Farside, I have to share with my sister and will only be able to afford a block in a rural area and build a shack.

    • 0
      0

      Paddington, lots of new housing estates with houses still being bought by young people. Many have done what we all have, worked two jobs and saved hard for a deposit. Sure, if you want your first home to be in the inner city you might be priced out.

    • 0
      0

      It is getting far worse; the mafia’s future plans for us –

      “The chamber wants the government to consider converting pension payments to elderly homeowners into a loan that is repaid when the property is sold.”
      https://www.australianageingagenda.com.au/…/retirement…/

    • 0
      0

      Sundays, we are about 70 kms out of the city and none of our kids live in inner city so your comment is incorrect and assuming. Hard as it was for us it is even worse now. Throw in a broken marriage and/or bad health and it becomes impossible to own your own home. Grandkids are going to have more trouble. Also, older people have lost their homes because businesses have gone bust as well. A few relatives have had that happen. No jobs or part time with insufficient hours is another issue for many. We cannot generalise because it is too complicated and diverse. Thankfully, we have a nice home but it will not cover all our kids. It is no mansion but comfortable. Some are well off so hopefully they will take care of their less fortunate siblings, one in particular. At this point in time only one is looking very prosperous. I guess money is not everything but it needs to cover the basic needs of shelter and food.

    • 0
      0

      Farside, my siblings & I have been double orphans for nearly 50 years now. My parents never owned the houses we lived in as my dad was a church minister and we were moved quite frequently.

      How are we supposed to inherit anything, then?

    • 0
      0

      it should not be a revelation to renters that they will continue to rent if they do not inherit or have the means to own a home. On a positive note when those homes once occupied by the deceased elderly hit the market they will eventually find owners and reduce competition for rental properties.

  3. 0
    0

    bill and i retired at the same time with the same amount,Bill bought a house and over the years he and is wife have been drawing the equivalent of 740 dollars-age pension Bill now has a house worth double and is a millionaire
    being single most of my money had to be invested in term deposit and I never got the whole pension by far
    Bill-will leave his kids a million bucks whereas my kids will get nothing

    • 0
      0

      So what? Now you want to punish Bill, or rather his kids, because he made different choices?

    • 0
      0

      KSS, isn’t this the thrust of the article in ‘narrowing the financial gap between renters and owners’. Sure, some people through no fault of their own live in poverty and there should be more public housing, but I am a bit sick of this jealousy towards home owners

    • 0
      0

      Me too Sundays. Anyone now retired could have bought a home in their younger days.
      My first house in Fairfield, [Sydney], a 4 room ex farm workers cottage cost just 2 years salary. As a 22 year old I wasn’t earning much, & struggled a bit to meet the mortgage, but managed.

      My second in Riverwood cost over 4 years salary, & was a bigger struggle to pay for, after my daughter came along, but we managed. I have no sympathy for those who lived the good life, drove the latest cars, had expensive holidays, & are now renting pensioners. They made their choices, & are now paying the price. I see no reason why I should now pick up the tab for their foolishness.

    • 0
      0

      So Hasbeen do you know how many years of salary it takes to buy a house now?

    • 0
      0

      gerry – I was the sole income earner in the family. We got a house. It did not happen through complaining about how unfair the system was.
      Perhaps you should have worked harder, got a second job, put yourself out, not spent your money on bling and did some of the work yourself.
      The formula is a well used one through generations. Of course it does not suit some folk and millennials are at the top of the list. Work it out!

    • 0
      0

      Musicveg we are talking about pensioners. Today’s pensioners should have been buying houses when I did, not having fun than trying to buy a home near retirement.

      I agree it is harder today for our kids, but unlike most of us, many will have some inheritance to help. My eldest 2 have bought or built really nice homes, rather grand to me, & are managing, but the younger one is going to have trouble getting into the market today.

    • 0
      0

      Sundays, the state government housing authorities have criteria for their housing. If you’re single, you are only entitled to a one bedroom unit/home, but if there’s two of you, you can have a two bedroom unit/home.

      I currently rent a 2 bedroom unit and I certainly wouldn’t want to go into a one bedroom government unit, as I know that I would be so claustrophobic that I’d have to get out of there asap. I need the 2nd bedroom for my study/spare room for when my now adult son (who has a disability) comes to visit me and stays overnight. My lounge room has no room to put in a sofa bed, so that’s not an option.

    • 0
      0

      Hasbeen, what about those of us, through no fault of their own were moved regularly for their jobs? We had no option but to rent. We didn’t always have a ‘new’ car, and sometimes had no car and had to public transport it to work. The shopping was done on the weekend when we could borrow a car to do it.

      My pension now with rent assistance is what I used to receive a fortnight when I first started working @ Australia Post, so there was not the option to purchase a home on that salary, then I was moved 4 times in 8 years between Lithgow, Canowindra, Canberra Region (several offices), and Carlingford, so I couldn’t put down roots and purchase a home.

      As for expensive holidays – what are they? We always had very cheap holidays, or even stayed @ home and explored where we were living or travelled to family.

    • 0
      0

      Suzi you are talking about want not need. It is not for the Government to subsidise wants. A single person only needs a single bedroom unit. There are millions of people living in such places that they either rent or have bought and make it work, overnight visitors included.

    • 0
      0

      SuziJ, I’m sure those who are couch surfing, or living in their cars, and worse on the streets would love a one bedroom unit. Sadly there aren’t enough.

      Now the kids have grown up, my sister has been waiting over two years to swap her 4 bedroom housing commission house for a retiree unit.

    • 0
      0

      Hasbeen,
      I really object to you or anyone else saying ‘Musicveg we are talking about pensioners. Today’s pensioners should have been buying houses when I did, not having fun than trying to buy a home near retirement.’ You do not know the circumstances that people were in that prevented them from buying a house back then.
      We are one of the lucky ones who live in public housing so manage to survive. BUT we did try to buy our own home many, many years ago when young – due to a shonky builder, me needing urgent medical treatment when pregnant, taking all our money at the time we never managed to get back on our feet.
      For many years, after my husband had a stroke, I was the sole breadwinner – it was difficult enough putting food on the table, paying all the bills, buying medication and looking after everyone without trying to put money aside to buy a home.
      Yes it would have been fantastic to do so, but it was not an option – neither was having 2 jobs.

      Do NOT assume that everyone frittered their money away on do da’s and holidays because it is just NOT true.

    • 0
      0

      jaycee1, i don’t even understand why Hasbeen even said that, I was asking how many years it takes to pay off a house these days for young people to set them selves up, i was thinking a lot longer than it used to be. Not sure what Hasbeens comment even means.

  4. 0
    0

    One group constantly gets overlooked – those on Aged Pension, still with a mortgage. I’m solo – always have been, and have worked double hard to get where I am. I was shafted out of my job 19 months before being eligible for Aged Pension. Stupid me took some money out of my super to put it in to my mortgage – but CL deemed I had too much ready money, so was ineligible for Newstart! (BIG lesson learnt too late – should have taken it out of super monthly). Despite every attempt to look for another job, employers shut the door on that. By god! – ageism is SO alive with employers!
    I’m now on the full Aged Pension, still with a mortgage of around $75,000 (home valued around $540,000), and I still have around $100,000 in super. Yes – I could take the money out of super and pay off the loan, but I get a far better return in my super – what I have to take out of super every year I just put on my mortgage. So I looked into refinancing to a better rate – not ONE single bank will even look at me.
    In my group, I know of plenty of other single people on Aged Pension, still paying a mortgage – many paying more than half their pension. They get no assistance. Whilst I am not saying they should, I am simply saying that not every non-renting Aged Pensioner owns their house outright. They still struggle just as much. I’m frugal, and can manage, but many barely do.

    • 0
      0

      Yes the group who has a mortgage at retirement is growing and will continue to grow.
      Having a debt on retirement with no other funds would be hard.
      I would probably clear the debt if I had the money and still have a nice emergency fund.
      Also would depend if on your own or a couple.
      Still better off in that you have a home than renting pensioners with nothing.

    • 0
      0

      One of the problems Paddington is grand mothers.

      I’d be selling up & moving to somewhere like Ayr, for the great climate, & much cheaper homes, but I could never get the lady to move that far from the grand kids. Hell I could buy an E type Jag with the spare cash. Guess I just have to drive my 30 year old Triumph, & shiver through winter.

  5. 0
    0

    “Lifetime homeownership rates will decline if some people postpone purchasing a home indefinitely,”

    Who pays for this stuff? If people don’t buy homes then home ownership declines! Who knew????

    “Currently, the Age Pension offers the same maximum benefit for owners as it does for renters.”

    Well no not really. The dollar anount of the basic pension may be the same BUT the homeowner is punished by having an allowance of $200,000+ less in assets AND not being able to claim a ‘rent allowance’ to offset costs of home maintenance that renters do not have to pay.

    • 0
      0

      Quite correct to say, KSS, “The dollar anount of the basic pension may be the same BUT the homeowner is punished by having an allowance of $200,000+ less in assets AND not being able to claim a ‘rent allowance’ to offset costs of home maintenance that renters do not have to pay.”

      No allowance is made for the extra costs homeowners have for ongoing maintenance of house and surroundings (garden, trees), replacements for worn-out / broken items, council rates, insurance, etc, etc.

      Such articles are meant to divide the retirees and put one group against another.
      It would be much better to pay all the same rate as Universal Age Pension at Age 65 yrs, and say 15 yrs of Residency. Then, all can do better than that if they can without being penalised. Also, with no Centrelink breathing down the necks of old pensioners creating health and anxiety issues for them. This is a massively resource-rich country which can easily afford that if politicians did not squander the massive taxes they raise, including the 7.5% included in Individual Tax Rates for paying age pensions.

    • 0
      0

      So who did you vote for at the last federal election? LNP? Told you so!
      Only expect things to get harder as our morally corrupt government comes after retirees repeatedly. The pattern is set in concrete. The next one floated is putting the family home into the assets test. Coming.
      You know the spiel: ‘sell your home, downsize, live off the difference, and when you are destitute apply for the pension’. That’s what you get when you fail to see a rich man’s government conducting its class war come after average citizens. Read my lips!

  6. 0
    0

    Those on Newstart cannot even afford to rent a house, and any rent assistance just goes to the owner’s investment package. So effectively the rent assistance is not really helping the Newstart recipient and/or pensioner who rents. It is just money going to different people. Where as if a home owner was to get assistance that money would go towards their own investment, their house.

  7. 0
    0

    “The chamber wants the government to consider converting pension payments to elderly homeowners into a loan that is repaid when the property is sold.”
    https://www.australianageingagenda.com.au/…/retirement…/

    WE NEED TO RAISE UP I KICK THE GANGSTERS OUT !!!!!!!!!!!!!!!

    • 0
      0

      So they want the next generation to miss out on inheritance even more so.

    • 0
      0

      They want to limit the ‘right’ of inheritance to only the ‘better’ classes.. and this in our ‘class-less’ society…

      George M, myself and a few others have it right, I think – universal pension, and then taxed on all income over and above. I, of course, go further, and advocate a one-stop shop retirement packaging for everyone of working age… into which there is a contribution paid every fortnight into their personal account, made up of the 7.5% + the going rate for super, and, of course, all added to the returned Stolen Future Fund AND the ‘additional contributions from other tax strands as required’, as stipulated by Menzies.

      Thus everyone draws a ‘superpension’ at a specified rate calculated by the same values and depending on ‘years of service’ to the country (that can be offset by a higher contribution over a shorter period, but the indexed top limit remains the same on an account’s investment) – then they can add more if they wish and receive extra – but that is profit on savings, same as if you put it in the bank or buy shares and recoup benefit.

      Now that’s a mouthful – but the smart among you will understand it.

      Now I have to sleep – been on the go all day doing fire relief runs, and am headed off tomorrow – the mind says 17, the body says 70…. but when you’re a leader, you take the hard ones as well as the good ones…

    • 0
      0

      Good on you Trebor for fighting fires, yes just convince your body it is younger, it is all in the mind really and don’t forgot to hydrate yourself, and no not with alcohol or soft drinks that will make it worse, try coconut water, will give you the electrolytes you need.

    • 0
      0

      No good getting all stressed about this. No good at our age!

  8. 0
    0

    While I have sympathy for people who are renting in their old age if they have lost their place through divorce, illness and so on I do not really worry about those of my generation who just refused to get a mortgage when we were young. I almost tossed mine in as well when the interest rate hit 17.4% in 1983/4. But we bit the bullet and got through the bad times. Now we have a place and now WE can do the travelling the others did way back instead of purchasing a place. Remember “oh we are off to Thailand, Bali and next month a cruise on Fairstar”. Could not afford it then because of house repayments – needed to work a lot of overtime just to get the payments in. Hey, and now we are the villains because we got a house with a higher value then when we bought it. Go figure??!

    • 0
      0

      Mariner, well if we had travelled when young at least we would have travelled. Now I cannot. I have regrets not doing the travel thing when able.
      We are on our third house so have moved a bit. This one is the last.
      I remember the 17% interest and we felt like paupers. The equivalent of today’s money was $60,000 with a big family so we were actually. It hurt for a while.

    • 0
      0

      Hey Paddington that huge interest rate was because of that mongrel Keating and Hawke and you love the labor party and you voted them in you copped your right wack

    • 0
      0

      Yes – Keating’s recession the peons needed to have but he didn’t suffer from … I said, during the Hawke era, that one day soon we would be looking back on these as ‘the good old days’… how true… and I never trusted Keating one inch – and I was a Union delegate.

    • 0
      0

      Funny you saying that Paddington. I well remember getting advice to travel while young. And that is what I did for about 15 years before settling down. Best thing I ever did. May not have had much money but had youth and plenty of fun and laughs. Great memories. Still do travel but a different type of travel now. Been to many countries that you would not venture in these days.

  9. 0
    0

    What a bunch of

  10. 0
    0

    Its a no brainer. Of course owning your own home is the key to a comfortable retirement vs existence.
    The problem with millennials is that they want life style (ie spend their incomes on themselves) and then they wonder why they cannot afford to pay off a house despite the lowest interest rates ever. I get tired of the demonisation of boomers who they charge with having had it all when they built their retirement through sacrifice, saving and hard work. And then there’s the continual demands for mum and dad to pay their way.
    This is the eternal argument where the have nots (who never will have) demand what they themselves refuse to achieve because of laziness and a belief that consuming is their birth right.
    Ok….got it out of the system for another day.

    • 0
      0

      MMM.. my son is a tradie and has two drinks on Friday night…. still saving.. the daughter does high-flying work in the movie industry – personal assistant to the executive director of Touchstone, don’ cha know – and still doesn’t have the home I keep pushing her (and her brother) to get…

      They’re going to need their inheritance(s) to do it, methinks.

    • 0
      0

      TREBOR everyone makes their own choices and therefore, accept the consequences of that decision.

    • 0
      0

      You make a lot of sense Mick, and you have put it rather well. Too many envious people here who’ll never understand that we earned our places through going without quite a few luxuries – which of course today are no longer luxuries. (I have to have everything and everything has to be brand new!)

    • 0
      0

      Pretty well on the money.
      Whilst circumstances are different for all of us and some can get caught in a bad place the reality of life is those who do the hard yakka and don’t waste their money on living it up were always able to own a home. Renters mostly refuse to see it from our point of view but if many of them looked back over the last 50 years they might see the problem. Its a tough world……and the poo hits the fan when you retire and the income stops.
      If you fail to plan then you most likely plan to fail.

    • 0
      0

      It is never the amount of money a person earns; it is how you manage it. I know of someone who always had an average wage and did very well in his lifetime.

Load More Comments

FACEBOOK COMMENTS



SPONSORED LINKS

continue reading

Technology News

Would you let AI choose your partner?

David Tuffley, Griffith University It could be argued that artificial intelligence (AI) is already the indispensable tool of the 21st...

Food and Recipes

How to spice up hummus

Few things are as universally loved as hummus. A blend of chickpeas, lemon, tahini, garlic, olive oil and cumin, whizzed...

COVID-19

Intensive care during COVID like a 'delirium factory', study finds

An international study of COVID-19 treatments has found patients admitted to intensive care early in the pandemic were treated by...

Fitness

The surprising health and fitness benefits of golf

Recently, many have had to rely on walking or virtual fitness classes to keep going with their favourite sports and...

Finance

Five smart moves for empty nesters

So, the kids have moved out, your home is finally yours again and you have ascended to the rank of...

Lifestyle

Why you turn down the radio when you're trying to park your car?

When you're looking for a destination, you might need to cut down the volume. Shutterstock Simon Lilburn, University of Melbourne...

Technology

Why we can expect smarter healthcare in 2021 and other tech trends

With last year dominated by the COVID-19 pandemic and much the same expected for 2021, it is unsurprising that healthcare...

Mental Health

Drug trial offers rare hope on Alzheimer's disease

There is finally a glimmer of hope in the fight against Alzheimer's, the most common form of dementia, which affects...

LOADING MORE ARTICLE...