According to the most recent data, there have been dramatic changes in Australia’s retirement landscape over the last twenty years. From 2003 to 2023, the share of retirees that own their homes free and clear has fallen from 75% to 66%. Meanwhile, the share of retirees with a mortgage increased from 13% to 17%. At the same time, the share of retirees residing in rental units increased steeply, more than doubling from 6% to 12%. These changes make the case that we should be worried about housing stability and financial security for the next generation.
The effective retirement age in Australia has similarly experienced a significant jump, increasing by half a decade since 2003. Women have begun retiring at older ages, with average ages of retirement increasing from 58.8 to 63.6 years. Men’s average retirement age has increased to 64.8 years, up from 59.9 years. Yet this shift raises really powerful questions. How can older Australians maintain a quality retirement with increasing cost of living pressures and the structure of our financial system changing?
The average superannuation balance of Australians in 2015 was just $245,122. For instance, by 2023, this amount had increased to $383,217, reflecting an increasing buildup of retirement funds. Disparities remain between genders. The impressive growth in women’s median super balance. Women’s median super balance more than doubled since 2015, compared to a 40% increase in men’s median super balance. In 2015, the median balance for men was $467,307—an increase to $504,420 in 2023.
Kyle Peyton, a financial expert, emphasized the significance of these trends during a recent discussion on intergenerational equity in retirement planning. As he explained, housing wealth represents the main form of financial safety net for the majority of retirees. This home equity is the biggest driver of household wealth in Australia. This latter sentiment highlights the importance of home ownership to the economic wellbeing of retirees.
Peyton added that the growing demographic of retirees who don’t own their home free and clear adds another risk. That’s a pretty big change! The whole Australian retirement system presupposes that people will be homeowners by the time that they retire,” he observed. He continued that having no home ownership may require Australians of retirement age to use up their superannuation savings at an accelerated rate. “You’re going to have to burn through a lot more of your super just to keep a roof over your head if you don’t have that home, because rent’s really expensive in Australia.”
The motivations for retiring too have changed over this span. In 2003, 39 percent of recent retirees reported that they had unexpectedly left the workforce due to health problems. By 2023, that number had dropped to 29%. This decline is likely indicative of changing attitudes toward work and retirement.
Peyton urges us not to waste time in doing all we can to fight these substantial challenges. “Australia needs to get serious about addressing intergenerational inequality,” he asserted. He is convinced that policy changes are essential to ensure that we have a fair retirement income system that will continue to meet the needs of all Australians.
While trends are constantly changing, one thing is clear. Australia’s retirement landscape is changing rapidly. The decline in home ownership among retirees and the rising average retirement age signal a need for comprehensive strategies to ensure that future generations can enjoy secure and equitable retirements.
