New research reveals renters need thousands more dollars in their superannuation funds than homeowners

ABC NEWS (Australia)

New research reveals renters need thousands more dollars in their superannuation funds than homeowners. Super Consumers Australia has found that the typical renter will need around double the superannuation of homeowners in order to have a comfortable retirement. A typical single retiree paying rent needs most 700 thousand dollars in super, compared to 322-thousand dollars for a homeowner.

Transcript

00:00The magnitude of it is really quite shocking. We thought it was going to be higher but to

00:08see that renters need to have around double or 300,000 more is really quite a shocking

00:17number, particularly when the typical super balance of 65 year olds is around 200,000.

00:24So it's really an impossible financial calculation that we're presenting today. And we're not

00:31actually expecting renters should save more. It's really actually a problem that government

00:38assistance has not kept pace with rents. Rents keep going up, but the rental assistance is

00:44not keeping pace. And so that's the real problem for people who are renting in retirement, they're

00:51facing this increasing cost. So for people who are retired and who rent, what proportion

00:56of their money goes towards their housing costs? A large amount. So for, there's about 325,000

01:09aged pensioners who get rent assistance from the government, but about 100,000 of those

01:14are still paying more than 30% of their income on rent after the rent assistance. So yeah,

01:21they're putting a lot. So you're comparing retirees who rent with retirees who are homeowners but

01:28who are also mortgage free, so they have no housing costs. Yeah, and that's really people

01:35in that situation. The superannuation system is working for them and they probably have accumulated

01:40a balance that will keep them in a comfortable retirement. So the system really is working

01:47for homeowners, but we think the government needs to do more to support renters because

01:52this escalating out-of-pocket cost is just not possible once you've retired. How much more

01:58money do they need? So we think that the rent assistance needs to go up by 50% to cover the cost, but also

02:09it needs to be pegged to rent CPI. Currently, it's pegged to CPI and just in this last year in 2025,

02:18CPI was 2%, rents have gone up 4.5%. So just in one year, renters are behind.

02:25And for single renters who are retired, the situation must be even worse.

02:30Yes, the situation is worse for singles because they have to cover all of their costs themselves,

02:37whereas couples can share the costs. So what we find is singles need about, for a comfortable

02:45retirement, a single renter would need about $650,000. A couple who are renting combined need

02:53about $780,000. So you can see there that the single on their own carries the financial burden on their own.

03:02And the situation for retirees who have an outstanding mortgage, they're still better off than those who are renting?

03:08Yes. Yes, they are. And because they have predictable costs if they continue to pay their mortgage,

03:16or any super that they have, they can also spend some of that to pay down the mortgage as well.

03:24And the home is an asset that doesn't count in the Age Pension Means Test, so it's a real benefit.

03:31Dr. Katrina Ellis, thank you so much. Thank you.

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