A new report has revealed that almost half of Australian retirees who rent are in financial stress. This reality could not be further away from the reality of homeowners in the same demographic. Katrina Ellis, who wrote the report, said it uses the most comprehensive data available from the Australian Bureau of Statistics (ABS). It casts a light on disturbing trends across the rental landscape that jeopardize retirement security for millions of Americans.
Rents have increased by an average of 4.5% this year. Commonwealth Rent Assistance was just raised by 2%. This gap highlights an issue commonly experienced by retirees who rent. With median rents skyrocketing nearly 50% since 2020, the picture has become remarkably bleak. A typical one-bedroom rental in greater Sydney now goes for about $560 per week. Australia’s other capital cities currently average rents of around $470 per week.
Financial Disparities Between Renters and Homeowners
Our Retirement Reality report released in late 2021 found that renting couples in retirement require a combined superannuation of $786,000. This sum is fundamental to them leading a cushy lifestyle. Married couples with home equity only need $432,000. For single retirees, the figures are similarly stark: those renting need around $659,000 in superannuation, whereas those with mortgage-free properties only require $322,000.
Dr. Cassandra Goldie, CEO of the Australian Council of Social Service (ACOSS), was clear about how serious these findings are.
“Median asking rents have surged about 50 per cent in five years, outpacing wages and leaving renters behind.” – Dr. Cassandra Goldie
Ellis continued to unpack these findings with us, explaining that the negative effect on financial well-being is profound.
“It wasn’t a pretty picture and showed that retired renters were more than three times more likely to be in financial stress than homeowners.” – Katrina Ellis
This gap raises alarming issues regarding the viability of renting in retirement. Nationally, the report finds that only about 1 in 5 retirees are renters. They are vulnerable as housing costs continue to outstrip their relatively stagnant earnings.
The Impact of Rising Rents on Retirement Security
The report illustrates that renters face an uphill battle in securing their financial future as they age. With a rising cost of living and flat income growth, too many retirees are finding themselves at a loss as they seek their best financial resources.
Renters need to save the equivalent of their superannuation savings twice over, Ellis stressed. This change is important for them to be able to attain the same quality of life as homeowners.
“The only way for renters to have the same quality of life as homeowners was to roughly double their amount of super which, of course, is almost impossible.” – Katrina Ellis
This growing crisis shines a spotlight on a dire need to reform policy to ensure that rent assistance is designed to succeed.
“It is alarming that it is just not keeping pace with fast-increasing rents, with rent assistance pegged to the wrong thing.” – Katrina Ellis
Fortunately, many others in the sector echo that strong, persistent call for change. Xavier O’Halloran, who leads the nonprofit Grounded Solutions Network, says millions of renters may face a retirement crisis if we don’t act quickly.
Call for Urgent Policy Reform
With the economic situation worsening, advocates like __ are urging the federal government to move quickly to ensure financial support for this vulnerable population. Tenants Union of NSW Goldie has called on the Minister for Social Services, Tanya Plibersek, to make a Rent Assistance review her first order of business.
“We’re calling on the Minister for Social Services, Tanya Plibersek, to address Rent Assistance as a matter of urgency. Every day this isn’t addressed, renters face an impossible financial challenge in retirement.” – Cassandra Goldie
O’Halloran reiterated these feelings, emphasizing that just telling renters to save up is not the answer.
“Telling renters to simply ‘save more’ isn’t the solution to this problem.” – Mr. Xavier O’Halloran
The consequences of inaction are clear. Millions of low-income Americans are already weighing difficult decisions about food, medicine, and other necessities just to cover the rent.
“Our surveys show that people on low incomes are skipping meals, forgoing fruit and vegetables and living in unsafe temperatures to save on energy bills just to keep a roof over their heads in the private rental market.” – Dr. Cassandra Goldie
As Congress prepares to adjourn, discussions are ramping up around rental assistance and housing affordability. We need to get on the front foot to preserve the financial futures of Australian retirees.
