Modern Australian Magazine



how the pension and super could leave you behind

  • Written by Rafal Chomik, Senior Research Fellow, ARC Centre of Excellence in Population Ageing Research (CEPAR), UNSW
how the pension and super could leave you behind

How we fund retirement in an ageing century ought to worry all of us.

But one group of us should be much more worried than the rest.

In a new set of research briefs published by the Centre of Excellence of Population Ageing Research, we report that most people do well out of our retirement income system and that the living standard of retirees has improved over the past decade.

In international comparisons, our system ranks highly, for good reason.

Most retirees do well

About 60% of older Australians can afford a lifestyle better than that deemed to be “modest” by widely used standards.

Households headed by baby boomers reaching retirement age between 2006 and 2016 did so with incomes 45% higher than those who retired a decade earlier.

Typical boomer households aged in their late 60s earn almost as much as they did when they were still working - only 20% less, that is, with about 80% of their working income maintained.

And their needs are lower. Lower spending in retirement is common because older households need to pay less for transport, less for working clothes, and have more time to cook.

Many continue to save while in retirement.

Read more: Please, not another super scheme, Mr Keating. It's what the pension is for

And they tend to spend less over time, rather than more over time as benchmarks publicised by the superannuation industry assume.

When we included the value of living rent-free for the 80% or more of retirees who own their own home (about A$10,000 per year on average), we found older Australians live in no more poverty than working age Australians.

But not renters

The living standards of those who rent in retirement are very different. Only about 15% of older renters can afford a lifestyle better than “modest”.

Single renters are particularly badly off.

Among all older people only about 10% fall below the poverty line set at half the median income.

Among older Australians who rent, 40% fall below.

Among older Australians who rent alone, it’s more than 60%.

If that relative poverty measure seems too abstract, an absolute dollar figure might help.

Alarming research aired on the ABC in September found that, on average, aged care homes were spending $6.08 per day on food per resident.

Our research finds that among pensioners who rent alone, one quarter spend even less than that per day.

And it’s getting worse

The pension has always favoured home owners.

On the one hand it is insufficient for renters and on the other it doesn’t cut pension payments to the owners of very valuable homes, because the value of any home - no matter how big - is excluded from the pension means test.

Read more: Let's talk about the family home ... and its exemption from the pension means test

Rental assistance, introduced to complement the pension in the 1980s, was meant to alleviate this, and to some extent it does.

But it climbs only in line with the consumer price index every six months, which usually fails to keep pace with rents.

Read more: Life as an older renter, and what it tells us about the urgent need for tenancy reform

Sydney rents have doubled over the past two decades. The consumer price index has climbed 68%.

As a result, rental assistance is less effective in reducing financial stress than it was when it was introduced, and is set to become even less effective if rents continue to climb more quickly than the price index.

And more of us look set to rent

Households headed by Australians aged 35 to 44 are now 10 percentage points less likely to own their own home than were households headed by people of the same age a generation earlier.

They might be merely postponing buying homes until they are older as more of what would have been their income is sequestered into super and they enter the workforce and retire later.

Read more: Explainer: what's really keeping young and first home buyers out of the housing market

If so, they might end up owning and paying off homes by retirement at the same rate as boomer households did before them.

If not, more and more of them could end up in poverty in retirement.

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

Read more http://theconversation.com/renters-beware-how-the-pension-and-super-could-leave-you-behind-105840

Australia Today

Why finding a good electrician in Sydney can be a challenge

News Company

There are many electricians in Sydney Australia but a good electrician that will do a good job is hard to find. Regardless of how much you are going to pay, it can never guarantee quality work. There is some work that can be done without the help of an electrician but it’s too much of a risk esp...

Would you like to grow old at home? Why we’re struggling to meet demand for subsidised home care

Michael Woods, Professor of Health Economics, University of Technology Sydney

In December, more than 127,000 Australians were waiting for a home care package.From shutterstock.comThe Royal Commission into Aged Care Quality and Safety is this week turning its focus to aged care in the home. So far it has heard evidence of long waiting times to access home care services and a c...

Married at First Sight's closer to reality than you'd think, demographically speaking at least

Thomas Sigler, Senior Lecturer in Human Geography, The University of Queensland

The 'reality TV' that is Married at First Sight may not actually be unscripted, but it does provide a demographic reality check.9NowNow in its sixth season, the Nine Network’s wildly successfulMarried At First Sight chronicles the adventures of 12 couples as they navigate the highs and lows o...

We need a legally binding treaty to make plastic pollution history

Trisia Farrelly, Senior Lecturer, Massey University

The world urgently needs to move past plastic. Veronika MedunaA powerful marriage between the fossil fuel and plastic industries threatens to exacerbate the global plastic pollution crisis. The Center for International Environmental Law (CIEL) estimates the next five years will see a 33-36% surge in...

Rebel teens can quickly make friends, but in the end, it's the nice ones who have the most

Joseph Ciarrochi, Professor of Psychology, Australian Catholic University

High school can be a hard place to make friends, but research shows being nice may be all it takes.Simon Maage/UnsplashSimply being nice wins more friends in high school than being a rebel, our study published in the journal Frontiers in Psychology has found. We looked at what sorts of social strate...

Holidays & Travel

5 Top Offbeat Things to do in Hong Kong

Hong Kong sure has some quirky attractions hidden up its sleeve. And if you are looking for some unusual sights and unique fun activities to experience, you won’t be disappointed...

Exploring Whakatane NZ

One of the most exciting road trips travelers can embark on is a motorhome hire new zealand journey. This unique and exciting country has it all when it comes to...

Important Considerations When Choosing Broome Accommodation

Broome is a fantastic place for visitors of all ages. Whether you want to lounge on the golden sands of Cable beach or take the kids to learn something new...

A tour guide to Melbourne

Welcome to the second most populous city in Australia with its beautiful sites and amazing scenery. Melbourne has been identified in so many spheres as one of the most livable...

Top 5 Places to Visit in Australia

The sheer, breathtaking expanse of the Australian continent is a thing of beauty. The vast landmass is actually packed with awe-inspiring landmarks to see and countless blood-pumping activities to partake...

Adhari Park: Why is it one of the must-visit sites in Bahrain?

Despite its small area that does not exceed the 1,000 square kilometers mark, the Kingdom of Bahrain is known for being rich of touristic sites and attractions. Bahrain comprises destinations...

Exciting Off Road Adventures In Western Australia

Western Australia has long been a top destination for off roading enthusiasts from all across the world. One look at some of the top off road destinations on offer in...

Things to Do and See in Ballina, Australia

The intricate coastline of New South Wales is renowned for its sumptuous, decadent beaches, hidden resorts and secret camping spots. A long and slow ride down the winding highway that...

Guide to Travel Necessities for 2018

Sure, it sounds like quite an adventure to hit an open road with nothing but a one-way ticket and an open mind, but the harsh reality is – you won’t...

Fashion & Beauty

Early Bird Fall Fashion Trends

Why should you wait for everyone else to discover the hottest trends for the season when you can be the one to do so? If you are searching for fashion...

5 Shaving Mistakes Most Men Make

Even though you’ve been shaving for your years, you may not have realised that you’re making some common mistakes. Perfecting the art of shaving will help your skin stay smooth...

How To Find A Wedding Dress On A Budget

Finding a wedding dress is one of the most exciting parts of wedding planning. When we think about wedding dress shopping, many of us picture a scene from ‘Say Yes To...

4 Signs it’s Time for a Facial Peel

If you love keeping your skin in the best possible condition but you’re not always sure when you should be scheduling a facial treatment such as a peel, this article...

The Reason Why You Were Rejected as a Hair Transplant Patient

There are a number of ways to address hair loss, with hair transplants being the most common. Taking the time to find an appropriate hair transplant clinic and the necessary funding...

Five Trends That Will Transform Beauty

Remember the Groucho brows, the palm tree hairstyle and the giant hair that were huge trends back in the ‘80s? Well, those times are behind us, fortunately, and with each...

Popular articles from Modern Australian

Early Bird Fall Fashion Trends5 Shaving Mistakes Most Men MakePreparing Your Car for a Road Trip in 5 Steps5 Top Offbeat Things to do in Hong KongExploring Whakatane NZNewly launched EyeHealth1st unites the majority of Australia’s independent optometristsDental Health at an Older AgeExpert Reveals Why You Can Remember Pizza Hut's 481 1111, and not Your Mum's NumberImportance of a Great Smile for Self-ConfidenceHow To Find A Wedding Dress On A Budget5 meditation tips for beginnersGet the Best Out of Garden Reticulation: Perth Expert Advice5 Smart-Home Upgrades You Should Invest InMeet a Car Wrecker as unique as a South Australian accent isBuying An Apartment In Melbourne