A new study by Super Consumers Australia (SCA) has found that renting single retirees are doing it tough on multiple fronts. By comparison, their homeowner peers experience a much more stable economic reality. According to their results, the typical single retiree who rents requires about $659,000 in superannuation. By contrast, homeowners only need around $322,000 in super to achieve an equivalent quality of life. This gap begs important questions about whether retirement savings are enough for renters, especially in today’s housing climate.
The fresh statewide analysis sheds light on a big and worsening issue—retirement security. It highlights that retirees living in cities with skyrocketing rent costs face greater challenges. A single person renting a one-bedroom apartment in Sydney requires a staggering $794,000 in retirement savings. By comparison, residents in Adelaide will only need around $509,000. The retirees in these localities are now more financially unstable due to the major increased cost of living.
Fiona York, CEO of Housing for the Aged Action Group, advocates for targeted government strategies to address the needs of female retiree renters. She points out that older women are often worse off when it comes to superannuation than men. Consequently, they experience a disproportionate detrimental impact from the exorbitant costs of renting.
“We know that older women have got less superannuation than men. They are more likely to be living in poor quality and expensive housing,” – Fiona York
The SCA’s analysis is a good reminder of the larger consequences applicable as the rental prices rise. It’s retirees who rent who have the most to lose. They are forced to pay 30%-47% more than home owners to achieve the same quality of life. A typical rented couple requires around $786,000 in superannuation to retire comfortably. By contrast, a married, home-owning couple needs just $432,000.
York emphasises that the shortage of retirement housing that accommodates renters is a major blind spot in Australia’s retirement system.
“We’ve known for a long time that there’s a really big difference in renting as an older person compared to owning your own home,” – Fiona York
This disparity in rental costs suggests that many retirees may face an “impossible financial problem” as they navigate their later years. The SCA advocates for a comprehensive plan surrounding superannuation for those nearing retirement age, emphasizing the urgent need for reform.
Many young Australian workers benefit from at least 12% of their salary being contributed to superannuation, while those retiring today have often received only 9% during much of their working life. More than $20 billion of this gap in contributions and need goes to aggravating the struggles older renters face.
In Adelaide, retirees currently paying $380 per week for rent may find themselves spending up to $590 per week to secure similar accommodations in Sydney. Since then, skyrocketing rental prices have left affordable housing almost impossible to find across Australia. This trend is exacerbating the economic pressure on seniors.
“The high cost of rent actually means people who rent in retirement need to spend 30 to 47 percent more than homeowners to have the same standard of living,” – SCA analysis
Furthermore, under current government schemes, a single renter can receive a maximum fortnightly payment of $215.40 if their rent exceeds $439.20. This support rarely comes close to meeting the real costs of living for the average retiree.
The current debate on rental affordability and superannuation policies demonstrates that urgent action is required from policymakers. Yet experts widely concur that both expanding rent assistance—like the kind provided through emergency rental assistance—and creating more low-cost housing is necessary.
“But hopefully by the time they retire, the government has also improved rent assistance and done the work to build more affordable housing so that there’s secure housing options for retirees who rent in the future,” – Ellis
