Declining home ownership a threat to retirement incomes, puts pressure on Age Pension

Declining rates of home ownership is a growing threat to retirement incomes, according to new research commissioned by the Australian Institute of Superannuation Trustees (AIST).

The report, No place like home: the impact of declining home ownership on retirementwritten by economist Saul Eslake, finds there is a clear link between deteriorating housing affordability and the adequacy of the retirement income system.

Mr Eslake said a key concern was the ongoing trend of a declining proportion of Australians who owned homes outright, along with an increase in the proportion of renters.

“If current trends continue, a lot more people will retire with either mortgage debt or having to rely on privately rented housing,” he said.

“Increasing numbers of retirees will use some, if not all, of their superannuation to discharge their outstanding mortgage, which in turn, will see more people rely on the
Age Pension.”

If this isn’t addressed future generations face poorer living standards and higher taxes to pay for increased Age Pension costs, the report warns.

AIST CEO Eva Scheerlinck said the report highlighted the need for governments to take a wider view of the implications of the housing affordability, and raises questions about the official forecasts of the Age Pension.

“The assumption that housing is a ‘fourth pillar’ in our retirement income system has become increasingly dubious,” said Ms Scheerlinck.

“Many of the standard ways we measure the adequacy of superannuation assume retirees own their homes outright when this may no longer be the case for a significant number of Australians.”

However Ms Scheerlinck does not support first home buyers accessing their super, as has been reported is under consideration by the Government.

“This report clearly shows that tapping into super to buy a home would simply lead to higher housing prices, rather than home ownership and favour some groups over others,” she said.

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1 thought on “Declining home ownership a threat to retirement incomes, puts pressure on Age Pension”

  1. Ummm, The Super scheme was NOT designed to pay off a mortgage.

    Big things are on the horizon in respect what you can do with save Don’t Super money!!!!

    After a working life time of denial and saving for retirement in Super it may turn out to be ‘fools gold’ for many!

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