• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

SuperGuide

Superannuation and retirement planning information

  • SuperGuide Premium
  • Account
  • Log In
  • SuperGuide Premium
  • Account
  • Log In
  • How super works
    • Super for beginners
    • Super rules
    • Employers guide to super
    • Super contributions
    • Super and tax
    • Accessing super
    • Super news
    • Women and super
    • Super tips and strategies
    • How-to guides
    • Super quizzes
    • Superannuation Q&As
    • Superannuation glossary
  • Super funds
    • Best performing super funds
    • Super fund rankings
    • Best performing pension funds
    • Pension fund rankings
    • Super fund average returns
    • Super investing strategies
    • Comparing super funds
    • Choosing a super fund
    • Choosing an investment option
    • Super fund fees
    • Insurance and super
    • Super fund profiles
  • SMSFs
    • SMSFs for beginners
    • SMSF administration
    • SMSF checklists
    • SMSF compliance
    • SMSF investing
    • SMSF pensions
    • SMSF strategies
    • SMSF Q&As
  • Plan your retirement
    • Retirement planning for beginners
    • When should I retire?
    • How long will I live?
    • How much super do I need?
    • Will I get the Age Pension?
    • How much will I spend in retirement?
    • Financial advice
    • Retiring overseas
    • Preparing for retirement
    • Retirement planning strategies
    • Retirement calculators and reckoners
  • In retirement
    • Income in retirement
    • Super lump sums
    • Super pensions
    • Age Pension
    • Working in retirement
    • Life in retirement
    • Senior concessions and services
    • Aged care
    • Estate planning
    • Super death benefits

Home / In retirement / Income in retirement / We’re delaying major life events, and our retirement income system hasn’t caught up

We’re delaying major life events, and our retirement income system hasn’t caught up

December 1, 2019 by Rafal Chomik Leave a Comment

Reading time: 3 minutes

On this page

  • Living longer, waiting longer
  • Delay is the new normal
  • Our retirement income system is little help

Asked to conduct an independent review of Australia’s retirement income system, the panel appointed by treasurer Josh Frydenberg reported on Friday that it was all tied up with the family home.

At every age range, Australians have more money saved through home ownership than they do through superannuation or anything else, much more:

Retirement Income Review consultation paper, November 22, 2019

The report is a consultation paper. The panel wants submissions by February 3.

It raises questions about how retirees without mortgage-free homes cope. The proportion is growing.

In part that’s because prices have skyrocketed. Over the past 20 years home prices have grown at about twice the pace of income.

That is in part because of the growth in migration. About 3.7 million migrants have settled in Australia in the past two decades creating new demand for housing.


Advertisement
SuperGuide Premium is ad-free

It is also because of the growth in credit, much of which went to Australians who already had homes rather than those who didn’t yet have them.

And it is also because housing supply has been slow to respond.

But the complex dynamics of high house prices don’t tell the full story.

A wide-ranging review of home ownership just published by the ARC Centre of Excellence in Population Ageing Research finds something else at play.

It’s the expansion of our lives.

Living longer, waiting longer

The typical age of a first home-buyer began climbing at the start of the 1980s, after dipping in the 1960s and 1970s as home ownership became widespread.

Compare super funds

Read more...

Advertisement

Between 1981 and 2016 the typical age increased by nine years from age 24 to age 33 at around the peak of the house price boom.

It was accompanied by a deferral in almost every other important life event:


Median age of major lifetime events 1966 – 2016

Source: CEPAR Research Brief ’Housing in an Ageing Australia: Nest and nest egg?’


In part this might be because the canvas of our lives has grown. The median age at death has grown by 12 years since the 1960s, from age 70 to 82.

Longer lives have meant longer adolescences and later ages at which we finish studying, find work, and start families.

The typical age of getting a first job is two years later than it was 50 years ago; the typical age of finishing education is five years later, the typical age of having a child is seven years later, and the typical age of getting married is eight years later.

Advertisement

At the same time the typical age of leaving the labour force is only four years later: it has climbed from 61 to 64. It’ll probably have to grow further, because mortgages aren’t typically paid off until age 62, ten years later than in the 1960s.

Delay is the new normal

Australia is not unusual in leaving things til later, even though house prices here have grown more than in most other countries.

There’s something more universal at play. Younger age groups may prefer the flexibility that renting offers. Longer lives mean they have more time to buy their homes. Even the nine year deferral in home purchase we have had so far should still see today’s young generations enjoying home ownership for longer than their parents.

Of course, many will choose not to buy. An increasing minority of mostly low income Australians look like being locked out of the market forever, and many who own homes will surrender them as a result of relationship breakups or other life events.

Some will regain them. Others will retire with mortgage debt: 36% of homeowners do so now, up from 23% ten years ago. Many will use super to pay off debt instead of using it to fund retirement.

Our retirement income system is little help

The odd thing about the pension is that the payment is the same for both owners and renters. In fact, over A$6 billion of age pension payments go to people living in houses worth more than a million dollars.


Advertisement

Renters receive rental assistance but it is pegged to the wrong index, so it has grown more slowly than rents.

The oft-quoted statistic, that old-age poverty in Australia is high, is wrong.

But our analysis, which takes account of housing, suggests that old age Australian renters do indeed have some of the worst relative poverty rates in the OECD.


Relative old age poverty rate of renters


Source: CEPAR Research Brief ’Housing in an Ageing Australia: Nest and nest egg?’

Older renters have greater housing affordability stress than both older home owners and younger renters.

About 37% of renters aged 64-74 have both a low income and pay more than a third of it in rent, up from 21% in 1996.

While increases in homelessness among older women appear to be largely due to greater population numbers, their increased use of homelessness services is disproportionate.

The population of women aged 55+ increased by about 3% per year between 2011 and 2016. Their use of homelessness services increased 11% per year.

Even if the typical Australian continues to become a homeowner by retirement, a growing minority will not, and will be treated poorly by our retirement income system.

The government’s review of the retirement income system is an opportunity to redress the balance.

Rafal Chomik, Senior Research Fellow, ARC Centre of Excellence in Population Ageing Research (CEPAR), UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Want to understand the super and pension rules in retirement?

Become a SuperGuide Premium member and access independent expert commentary on important retirement rules, including taking a super lump or starting a super pension, working in retirement, the Age Pension rules, Commonwealth Seniors Health Card and the latest super rates and thresholds.

Includes performance rankings for 235 super funds and 166 pension funds, more than 600 articles, how-to guides, checklists, tips and strategies, calculators, case studies, quizzes and a monthly newsletter.

Find out more


Learn more about retirement income in the following SuperGuide articles:

10 common ‘myth-conceptions’ about retirement income

February 10, 2021

Reverse mortgages: What are they and how do they work?

December 2, 2020

How to maximise your Age Pension

September 17, 2020

What is the Pension Loans Scheme, and how does it work?

September 2, 2020

Rules of Thumb: Do these popular retirement planning hacks measure up?

May 7, 2020

How can you plan your income needs in retirement?

April 1, 2020

Worried about your post-virus finances? 10 tips to help stretch your retirement dollars

April 1, 2020

Is a bucket strategy the solution for your retirement income plan?

March 23, 2020

How much super do I need to retire?

February 11, 2020

How inflation affects your retirement income forecast

August 10, 2019

‘Today’s Dollars’: The impact of inflation on retirement income

April 8, 2019

Retirement income in Australia: An overview

February 18, 2019

Target retirement income: An explanation of the 66-80% rule of thumb

February 8, 2019

Related topics

In retirement Income in retirement

IMPORTANT: All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether any information on SuperGuide is appropriate to you before acting on it. If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Learn more

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

How super works
Super for beginners
Super rules
Employers guide to super
Super contributions
Super and tax
Accessing super
Super news
Women and super
Super tips and strategies
How-to guides
Super quizzes
Superannuation Q&As
Superannuation glossary
Super funds
Best performing super funds
Super fund rankings
Best performing pension funds
Pension fund rankings
Super fund average returns
Super investing strategies
Comparing super funds
Choosing a super fund
Choosing an investment option
Super fund fees
Insurance and super
Super fund profiles
SMSFs
SMSFs for beginners
SMSF administration
SMSF checklists
SMSF compliance
SMSF investing
SMSF pensions
SMSF strategies
SMSF Q&As
Plan your retirement
Retirement planning for beginners
When should I retire?
How long will I live?
How much super do I need?
Will I get the Age Pension?
How much will I spend in retirement?
Financial advice
Retiring overseas
Preparing for retirement
Retirement planning strategies
Retirement calculators and reckoners
In retirement
Income in retirement
Super lump sums
Super pensions
Age Pension
Working in retirement
Life in retirement
Senior concessions and services
Aged care
Estate planning
Super death benefits
Advertisement
Compare super funds

Footer

Important: Disclaimer

All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs.

You should consider whether any information on SuperGuide is appropriate to you before acting on it.

If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions.

Learn more

About SuperGuide

SuperGuide is Australia’s leading superannuation and retirement planning website. Learn more

Superguide Pty Ltd ATF Superguide Unit Trust as a Corporate Authorised Representative (CAR) is a Corporate Authorised Representative of Independent Financial Advisers Australia, AFSL 464629

  • Contact us
  • Advertise on SuperGuide
  • Careers

Before using this website

  • New to SuperGuide?
  • Terms and Conditions of Use
  • Financial Services Guide
  • Privacy Policy and Privacy Collection
  • Copyright Policy
  • Editorial Policy and Complaints
  • Disclaimer

  • SuperGuide Premium
  • Subscriber feedback
  • Sitemap