Housing and economic security in retirement
Home ownership is a significant component of the third retirement
pillar—voluntary private savings. Some consider home ownership so important
that it should be considered the fourth pillar of the retirement income system.
As noted in chapter 5, adequacy of retirement income and economic security
in retirement are highly dependent on home ownership and access to affordable
housing. People who retire without owning a home, particularly single women,
are at greater risk of living in poverty and experiencing housing stress.
This chapter discusses the increase in the number of Australians,
particularly women, who are relying on private rental accommodation in
retirement. It also examines proposals to assist retirees who own their own
homes, but find themselves cash poor in retirement.
Women in retirement and housing stress: a troubling trend
A number of participants in the inquiry highlighted the
interrelationship between housing and economic security in retirement. In
particular, submitters noted that older people living in rental accommodation
faced much higher risks of poverty than older people who owned their own home.
Because older women—and in particular older single women—are more likely to be
renters than single men or couples, some inquiry participants argued that
assisting older renters was an important aspect of improving women's economic
security in retirement.
The AIFS explained that although the majority of retirees own their own
home outright, in 2013 single women were more likely than single men or couples
to be renting or still paying off their mortgage in retirement. As such, single
women of retirement age are disproportionately more likely to experience
housing stress. Together with the fact that single older women are more likely
to rely entirely on the Age Pension (as discussed in the previous chapter),
they are therefore more exposed to poverty in retirement:
After taking housing expenses into consideration, over 60% of
single retired women were not able to afford a modest lifestyle, relying almost
entirely on the age pension as their source of income. Single men fared
slightly better, with fewer than half of single male retirees aged 65 to 69,
and around 60% of those aged 70 or older not able to afford a modest standard
of living. These results highlight the relatively poor standard of living among
current retirees, who have not had the benefit of compulsory superannuation for
most of their working lives and have little in the way of retirement savings.
The AIFS also pointed to a worsening trend in housing security for
Australian retirees, with estimates suggesting that by 2036 one in four
retirees will be renters rather than homeowners. Given the trend toward
deteriorating housing security, the AIFS submitted that 'retirement policy
needs to ensure that assistance to meet housing costs keeps pace with the
increasing costs of housing'.
Similarly, ACOSS noted that while only 11 per cent of Age
Pension recipients currently rent privately, this number is projected to
increase in future years.
In this connection, it noted the Australian Housing and Urban Research
Institute's (AHURI) warning about projected trends in home ownership among
older people over the next decade:
The number of renters aged 65 or over living in low income
households is projected to increase by 115 per cent from 195,000 in 2001 to
419,000 in 2026. The greatest projected change is in the 85-and-over age range,
where the number of low income renters is estimated to increase from 17,300 to
51,000, creating a continuing demand for affordable housing suited to older
The NFAW also observed that the changing circumstances and demographics
of Australian women suggest there will be growing demand for housing support in
the future. In this respect, it referred to a report by AHURI, Too Big to
Ignore Report—Future Issues for Australian Women's Housing 2006-2025, which
Over the next 10 to 20 years then, Australia's female
population will not only be much older, and also include significant
populations of (older) Indigenous women and women from CALD [culturally and
linguistically diverse] backgrounds, as well as older women with disabilities,
it will also include more women who have never married or had children, more
women living in de facto relationships or remaining unpartnered for extended
periods of time, more women who have had their first child in their 30s (or
later still) and more women who are divorced or separated and who will not
Underlining the difficulties faced by non-homeowners in retirement, the NFAW
submitted that the 'main group still suffering persistent poverty' in Australia
were people reliant on the pension and living in private rental accommodation.
This cohort, the NFAW noted, was 'overwhelmingly women, especially single
The committee's 2015 report on housing affordability in Australia noted that
to meet their changing housing needs older people may require modifications to
their dwellings to improve access, to make the surroundings safe and secure, to
ensure that certain appliances (heaters, taps, showers) are maintained and
simpler to use, and to cater for limited mobility and other health conditions.
In other words, the dwellings of older people need to be made free from hazards
and obstacles, comfortable, and take account of reduced mobility, and be
Anglicare Australia explained that because older renters suffer from higher
levels of housing insecurity, they are less able to 'age in place' than older
homeowners. This not only leads to poorer outcomes for renters, but also places
a heavier demand on the aged care system. Anglicare explained that:
...older people living in private rental are very afraid to ask
for changes to be made to that accommodation so they can live in it for longer.
They feel afraid that if they ask for a rail in the shower or a rail up the
steps at the front of the house this will call the landlord's attention to them
and the landlord will put the rent up or they will become known as problematic
tenants and be asked to leave. We know that most people want to age in their
own homes. It means that people in private rental do not stay in their own homes
as long as those who have access to privately owned housing. That in itself
brings people into the aged care system earlier, which we know costs more.
UnitingCare Australia observed that retirees often depend on their home
to fund aged care and other retirement expenses. It noted that with declining
home ownership rates for retirees, alternative means should be identified to
help people save for their retirement:
While we recommend that more work is done to unlock the
potential of the home to self-fund retirement we also know that home ownership
in Australia is in decline and that for many low-income and disadvantaged
people it is unachievable and that the risk of poverty is often greater for
non-home owners than for home owners. Therefore we believe we need to increase
the options that are available to help people save for retirement and aged care
costs which are not dependent on home ownership.
With declining home ownership rates, older women also face growing risks
of homelessness. Research commissioned in 2014 by the Mercy Foundation
identified a growing group of older women experiencing homelessness. It found
These are women who have never before experienced
homelessness or a housing crisis in their lives. This group of women had raised
children, volunteered in their communities and/or cared for older relatives.
Due to the unpaid (yet valuable) nature of their contribution throughout their
lives, many are arriving in retirement single and poor. As a direct consequence
of this they are experiencing homelessness or housing crises.
Mr Ian Yates, COTA Australia, rightly observed that 'it is heartbreaking
and shameful that a new cohort of Australians—vulnerable older women—are
joining the ranks of the homeless, rather than homelessness being reduced
across the board'.
COTA Australia outlined the range of factors that threaten to increase
housing stress and homelessness among the most vulnerable older Australians,
which includes a large proportion of women, in coming years. They include:
a consistent trend to reduced outright home ownership for people
going into retirement in the future;
a public pension system in older age that largely presumes
outright home ownership or appropriate housing security is already in place for
reduced access to affordable public and social housing in all age
the lack of appropriate, affordable, private rental housing across
all ages; and
the inadequacy of public rental assistance in the face of a
housing affordability crisis.
Proposed measures to assist renters
Anglicare Australia informed the committee that its most recent annual
research on costs of renting revealed a striking lack of affordable rental
accommodation available in the current housing market:
In 2015 we surveyed 65½ thousand properties and tested them
for affordability if you were on an age pension. We found that out of 65,614
rental properties, only 0.9 per cent would have been affordable for a single
person living on an age pension.
A number of submissions recommended proposals aimed at improving the
supply of affordable rental properties available for pensioners, or
supplementing the Age Pension to ensure pensioners in rental accommodation were
better able to meet their housing costs. Recommendations made in this regard focused
on two policy mechanisms in particular: the National Rental Affordability
Scheme (NRAS), and Commonwealth Rental Assistance (CRA).
The committee notes that both NRAS and CRA were addressed in greater detail in
the committee's 2015 report, Out of Reach?: The Australian housing
National Rental Affordability
The committee has noted in the Out of Reach report that
affordable and secure housing brings health and wellbeing advantages for
renters, especially as they grow older. In that inquiry, COTA noted that the
supply of social housing was an essential part of the housing stock, which
provided low income people and homeless people or people at risk of
homelessness with a pathway to secure long term accommodation. Social housing
is particularly important as public housing is no longer guaranteed—being old
or over 65 is no longer a criterion for entering into public housing.
Social housing is better able to meet the needs of disadvantaged groups
as it offers lower rents, more secure and stable tenure and appropriately
modified housing. However, there is fierce competition and long waiting lists
for social housing as supply is limited.
Some submissions supported the continuation of NRAS. NRAS is a
partnership between the Australian Government and the states and territories to
invest in affordable housing. It was designed to stimulate and add to the
supply of affordable housing by offering annual financial incentives to private
investors and community organisations to build and rent homes to low- and
moderate-income households at a rate at least 20 per cent below market rates.
COTA Australia supported the development of government initiatives to
encourage private sector development of affordable housing options, and expressed
its support for NRAS in this connection. It argued that NRAS:
...made a very useful contribution to increasing the supply of
affordable housing, particularly in locations that are close to services and [we]
are deeply disappointed that the Government has withdrawn funds for Round 5 of
the Scheme and there are no plans for further investment. 
COTA Australia acknowledged that there were problems with the
administration of NRAS, but maintained these could have been addressed.
According to Dr Hodgson, NFAW, the type of housing that is available is
often unsuitable and unaffordable for older women. She noted:
NRAS was one of the few instruments that was introduced to
look at the supply of housing as opposed to the tax system, which is mostly a demand
focused instrument. What it was doing was giving an incentive to people to rent
properties at less than market rate, which would have been suitable for some
older women who do not want to go into share housing or who do not want to live
in a hostel. So we think that, with the axing of NRAS, a whole spectrum of
people who are low income and disadvantaged are missing out.
The committee's aforementioned 2015 report, Out of Reach?: The
Australian housing affordability challenge, contained a number of recommendations
relating to NRAS. These included a recommendation that:
...in the absence of any credible alternative scheme designed
to increase the supply of new affordable housing and considering steps have
already been taken to improve the administration and implementation of NRAS,
that the Australian Government continue with NRAS round 5.
The committee supports the development of innovative government
initiatives to encourage private sector development of affordable housing
options. The committee considers that in the absence of any credible
alternative scheme, the Australian Government should consider continuing with
Commonwealth Rental Assistance
A number of submissions recommended that CRA be reviewed to ensure it
adequately meets rising housing costs in Australia.
ACOSS noted that for the one in eight older people who rent privately,
the maximum CRA is well below typical private rents at a maximum of $64 a week.
In its report on affordable housing in Australia, the committee noted
that older people who rent are one of the most disadvantaged groups in
Australian society and that their numbers were increasing. Older people living
in private rental properties report that they experience high levels of anxiety
due to 'unstable tenure, high and frequent rent rises and the need to move
relatively frequently'. Approximately one in four recipients of the CRA payment
aged over 65 was still in rental stress after receiving the payment. The
committee noted that single women with low superannuation balances and those
facing relationship breakdowns in their later years were 'very vulnerable to
COTA Australia argued that the Commonwealth government, in addition to prioritising
measures to address a sufficient supply of affordable and appropriate housing, should
significantly increase the maximum CRA payment for Age Pensioners. It noted
that as home ownership rates are trending downwards and future retirees will
increasingly be renters, the inadequacy of the Age Pension for retirees who
rely solely on the pension and do not own their home needs to be urgently
The Grattan Institute argued that a boost to CRA would help those
already experiencing poverty in old age, as well future low-income retirees.
Increasing CRA could provide targeted support to retirees who do not own their
own home, in particular older women. The Grattan Institute argued that
increasing the CRA would be more beneficial than proposals to boost retirement
The need to address the adequacy of the CRA was also examined in detail
during the committee's inquiry into housing affordability in Australia, which
reported in 2015. The report recommended that the Australian Government:
review the eligibility criteria for CRA to ensure that it is targeted
at those most in need;
review the method of indexing CRA with a view to retaining its
review the adequacy of CRA.
Australians are becoming less likely to own their own home in
retirement, with increasing numbers of older people relying on private rental accommodation.
The committee is concerned that the retirement income system does not
adequately address the rising housing costs for older people renting in
retirement, particularly single women, who are at greater risk of living in
poverty. The evidence received during this inquiry supports the findings of the
Out of Reach?: The Australian housing affordability challenge report
that the adequacy of the CRA to meet housing costs for renters needs to be
addressed. The committee considers that increasing CRA is one of the most
significant measures that could immediately assist those retirees under the
greatest financial stress.
In light of the growing number of older people, particularly
women, who are relying on private rental accommodation in retirement, the
committee recommends that the Australian Government urgently review the
adequacy of Commonwealth Rent Assistance.
The committee reiterates recommendation 26 of its 2015 report,
Out of Reach?: The Australian housing affordability challenge:
In light of the anticipated rise
in the number of older Australians in the private rental market, and the
insecure tenancy confronting many older renters, the committee recommends that
the Australian Government look closely at its aged care policy so that it takes
account of the particular difficulties confronting older Australians in the
rental market. The aim would be to determine how policies designed to assist
older Australians to remain in their home could take better account of, and
accommodate, the added difficulties for older people accessing safe and secure
housing and in conducting modifications to rental dwellings, and more broadly
in renting in the private rental market.
Accessing equity in the home
Women in Super observed that the family home is the largest asset for
many retirees, yet many older people may be income poor if their cash income is
not enough to meet their daily needs. While home owning retirees may have the
benefit of not paying rent and be considered asset rich, the family home is an
illiquid asset and there may also be ongoing maintenance costs. 
Women in Super noted that many retirees are reluctant to sell their
homes to improve their retirement incomes. One explanation is concern that they
may need the asset to cover the cost of aged care. 
Research by the Productivity Commission found that around 40 per cent of
Age Pension recipients who owned their own home did not meet a 'modest
Of those people, the majority could use their home equity to reach and maintain
this income level over the rest of their lives.
The research also found that 'there is currently little interest among older
Australians in making use of financial equity release products'.
In light of the Productivity Commission's finding that many older
Australians are asset rich and income poor, UnitingCare Australia supported
'further consideration of unlocking the value of the principal residence to
help people self-fund their retirement and aged care needs whilst maintaining a
decent standard of living'.
Women in Super considered that more work needs to be done to help
retirees remain in their own home while relieving the burden of maintenance and
need for additional retirement income to live comfortably. It suggested further
developing home equity release schemes. 
The Bankwest Curtin Economics Centre cautioned that careful
consideration needed be given to any proposals to encourage reliance on
personal housing assets in old age, as women are more reliant on primary home
assets than men. As such women are more vulnerable to the risks and costs
associated with realising housing equity.
Similarly, Professor Miranda Stewart was mindful that for women who do
own their own home, it is a critical element of their economic security in
retirement as it is often the only substantial asset that many women acquire
during their lifetime. As such, she argued that any proposals to include home
ownership in the age pension asset test or to change tax concessions relating
to home ownership should be carefully scrutinised as they would likely have a
differential and negative effect on women.
Professor Alan Duncan, Bankwest Curtin Economics Centre, argued that the
desire for flexibility in accessing home equity in the retirement phase is
likely to increase as the baby boomer generation enters retirement. He
I think individuals now more than ever before have different
lifestyle aspirations around the retirement age and beyond. We are seeing a
substantial hump of retirees from the baby boomer generation; they will be
hitting the retirement phase over the next five to 10 years. Arguably, the
aspirations and the lifestyle choices of the baby boomer generation are
different to previous cohorts of the builders. As a consequence, I think
flexibility in the way that one can manage finances and lifestyle opportunities
over the retirement phase is different now from before, and, hence flexibility
in product to allow that to happen is important. But there are risks, and I
think an awareness of those risks—in some sense the accumulation of financial
literacy, amongst others, moving into retirement—would be helpful to provide
more security and to offset some of the risks that might otherwise be in place.
The Australia Institute proposed expanding the Pension Loans Scheme, a
government run reverse mortgage scheme which allows eligible users to borrow
against their home to increase their retirement income. The scheme is not well
known and in its current form has very strict eligibility criteria. The
Australia Institute argued that an expanded Pension Loans Scheme should be used
to increase retirement incomes for those who rely on the age pension.
The Pension Loans Scheme was originally designed to accompany a proposal, which
was never implemented, to include the principal residence in the assets test
for the Age Pension.
The committee considers that there may be merit in further considering
the development of products to unlock equity in the home for those who find
themselves asset rich but cash poor in retirement. However, the committee is of
the view that any such proposals should have regard to the evidence of women's
greater reliance than men on the home as their primary asset in retirement.
Further, the committee is concerned that any proposals to enable access to home
equity for retirement income should not be tied with a move to include the
principal residence in the assets test for the Age Pension.
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