Not so ‘lucky country’: Aussies retiring in poverty set to rise

Australians face the “brutal double whammy” of going through their entire working life unable to afford a home and ending up in poverty when they retire, a new report has found. According to the Australia Institute, one in five Aussies are retiring into poverty, with this number only likely to rise in the coming years. Australia Institute chief economist Greg Jericho said it was unfair that Australia was a rich country, but people could work for 50 years and still retire in poverty. “I think the figures would shock most people,” ,” Mr Jericho told NewsWire. “We are a rich country, but one in five Australians living in poverty in retirement is backwards. Australians view the country as being the lucky country, a fair country and an equal country. “Australia’s broken superannuation and pension systems are condemning a growing number of retirees to financial misery in their sunset years.” The ASFA Retirement Standard suggests a single person can enjoy a “comfortable lifestyle” on about $51,000 a year while a couple would need about $72,000 for the same standard of living. Mr Jericho said these figures were based on owning a house outright, with the number of Aussies being able to afford a place falling. “We know Australia’s retirement system is based on owning a house outright, meaning you no longer are paying a home off or renting and we know that this is decreasing,” he said. Results from the latest census show Australian home ownership dropped 3 percentage points between 2001 and 2021. The 2021 census reveals a home ownership rate of 67 per cent, down from 70 per cent in 2006. While the general home ownership rate remained between 67 and 70 per cent from the early 1970s, the rate for different age groups has varied markedly over this time. Mr Jericho said increasing home ownership would help the problem, but Australia needed to also plan for a retirement system where not everyone owned their home. “We need to look at the current realities that more Aussies will rent in retirement,” he said. “There are ways we can help pensioners living in poverty. The easiest way to do this is to raise the aged pension.” To afford this policy, the think tank says Australia should look into reducing superannuation tax benefits for those “who will already retire in comfort”. “We encourage people to be able to save through super. The problem is the people you want to encourage to save are those on the border between being on the pension or being able to survive on their superannuation. But those people don’t have a great deal of income in their 50s and 60s to put away for their retirement,” Mr Jericho said. Mr Jericho said he was still supportive of superannuation as a whole but believed the system needed to be overhauled. “The reason governments should give a subsidy is for a public benefit. What we have here is a tax discount that provides no public benefit at all,” he said. “It just gives people that didn’t need it more money and reduces the amount of revenue that the government has to fund aged care and the pension.”