Australia\u2019s superannuation system faces a catastrophic failure, as workers still renting in their retirement are left behind. <\/p>\n
In a grim prediction, about 750,000 Australians approaching retirement will be left renting and without enough superannuation to cover their costs, effectively leaving them in severe financial hardship. <\/p>\n
According to a Home in Place commissioned survey of 772 renters aged 55 to 69 shows a bleak outlook for those approaching retirement, as a third predict they will run out of superannuation in just five years if they need to rely on it for rent. <\/p>\n
Four in 10 say they \u201cdefinitely can\u2019t\u201d afford to rent privately on the aged pension, while six in 10 say they spend more than 30 per cent of their income on rent, meaning they are technically in housing stress. <\/p>\n
Home in Place group executive manager Martin Kennedy told NewsWire the superannuation system was not set up for Australians renting in retirement. <\/p>\n
\u201cThese people are very unlikely to become homeowners, as if you are deep in the second half of your career, the chances of getting a home loan are very slim for obvious reasons,\u201d he said. <\/p>\n
\u201cWhat that means is this group of people are likely to be stuck renting forever and that is a problem because our whole retirement system is predicated on people in their later years will have very few housing costs because they will have paid off a home.\u201d<\/p>\n
Mr Kennedy said a secondary assumption is that Australians who were renting would be able to get by on their superannuation and government payments.<\/p>\n
\u201cNeither of those assumptions hold up, so we are talking about 750,000 Australians heading into retirement without homes that they own, not enough super and in a rental market that makes the aged pension look like pocket money,\u201d he said. <\/p>\n
This number is predicted to jump over the next generation, as less Australians are able to afford to buy a house. <\/p>\n
According to Australian parliament figures, 61 per cent of Australians aged between 25-34 owned a home in 1981, but that number plunged to 43 per cent by 2021.<\/p>\n
Mr Kennedy said 20 per cent of these Australians believed they would have to work forever, while just 8 per cent said they would have a comfortable retirement. <\/p>\n
\u201cThe best-case scenario is some people stay in their current roles longer than they would\u2019ve chosen to do otherwise,\u201d he said.<\/p>\n
\u201cThe logic underpinning the pension and super system is that by the time they are dependent on these (pension and super) they will have no housing costs.<\/p>\n
\u201cIf you haven\u2019t got a house, neither of these are going to go very far. <\/p>\n
Superannuation targets out of reach for renters<\/p>\n
Australians stuck in the rental market are being warned they will need to save twice as much as those who own their own home in retirement.<\/p>\n
According to Super Consumers Australia (SCA), a single person who is still renting needs a super balance of $659,000 to meet basic needs when they retire, more than double what a person who owns their own home needs at $322,000.<\/p>\n
Meanwhile, a couple who rents needs $786,000 combined in super compared with $432,000 combined in super for a couple who own their home.<\/p>\n
The SCA said this would cover a modest retirement, with the retiree in part relying on the aged pension.<\/p>\n
It said this spending rate had a 90 per cent chance of lasting until the retiree reached 90.<\/p>\n
According to the tax office, the median superannuation balance for Australians aged 55-69 is between $170,000 and $210,000. <\/p>\n
SCA deputy chief executive Katrina Ellis told NewsWire that it was \u201cpretty grim\u201d for Australians approaching their retirement if they didn\u2019t own their own home. <\/p>\n
\u201cBy doing these numbers we are quantifying the gap.\u201d she said.<\/p>\n
\u201cRenters are exposed to the whims of the rental market and whatever landlords want to charge. They have that as an ongoing, relentless cost throughout their retirement.<\/p>\n
\u201cMeanwhile, people who own their home have very low housing costs once they\u2019ve paid off their mortgage and that is the real gap between renters who face higher costs and homeowners who have stable payments in retirement.\u201d<\/p>\n
Ms Ellis said the retirement system, including superannuation and pension payments, was based on a retiree owning their own home.<\/p>\n
\u201cWhen the system was designed it wasn\u2019t contemplated that so many people would be retiring with a mortgage or expecting to rent for their entire life,\u201d she said.<\/p>\n
Ms Ellis called on the Australian government to do more to help older Australians, particularly those who are still renting. <\/p>\n
\u201cThe big thing that is not keeping pace is the government\u2019s commonwealth assistance payment which they pay to pensioners who are renting a property,\u201d she said.<\/p>\n
\u201cThe government did two adjustment payments in 2023 and 2024 because they realised it was falling behind, but now it is just going up with CPI.\u201d<\/p>\n
This led to rental assistance briefly catching up in 2024 before sliding in 2025, she said.<\/p>\n
The Australian Bureau of Statistics said rental prices rose by 3.9 per cent in 2025, although this figure is closer to 4.3 per cent when excluding the government assistance.<\/p>\n
Overall, the CPI closed the year up 3.8 per cent.<\/p>\n
\u201cAutomatically there\u2019s a gap and that payment really needs to keep up with rent,\u201d Ms Ellis said. <\/p>\n
Build out of an impending disaster<\/p>\n
Mr Kennedy said Australia faced a housing crisis for older Australians that was not being addressed.<\/p>\n
\u201cThe numbers are right there for anyone that cares to look at them, (this housing crisis) is coming and it is entirely predictable, so why aren\u2019t we preparing for it?\u201d he said.<\/p>\n
Mr Kennedy warns failing to address the issue now will create a bigger disaster in a generation\u2019s time, as home ownership rates continue to fall. <\/p>\n
He said 10 per cent of all new houses constructed in Australia should be social or affordable homes.<\/p>\n
\u201cThere isn\u2019t a quick thing but there are things that definitely should happen,\u201d Mr Kennedy said. <\/p>\n
\u201cThere needs to be a substantial increase in the level of social and affordable housing.\u201d<\/p>\n
The Australian government has a plan to build 1.2 million new homes in well-located areas over five years starting from mid-2024 in a bid to bring down house prices.<\/p>\n
Part of this is a one\u2011off $2bn payment to states and territories to deliver a permanent increase in social housing stock.<\/p>\n
Mr Kennedy said the government\u2019s plans did not go far enough. <\/p>\n
\u201cFor around 750,000 Australians, the retirement system is simply not fit for purpose,\u201d he said. \u201cWe need more social and affordable housing to avoid disaster.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Australia\u2019s superannuation system faces a catastrophic failure, as workers still renting in their retirement are left behind. In…\n","protected":false},"author":2,"featured_media":642972,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[64,63,99,186,115817,184,185],"class_list":["post-642971","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-au","tag-australia","tag-business","tag-finance","tag-newswire-business","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/642971","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=642971"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/642971\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/642972"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=642971"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=642971"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=642971"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}