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Retired renters at significant disadvantage
New research from Willis Towers Watson has confirmed what most superannuation fund executives have always known – owning your own home and being mortgage free represents a significant advantage.
The Willis Towers Watson analysis compared the outcomes for home owners and renters at retirement and found that the high levels of retirement income adequacy were project to occur among homeowner couples with 94.7per cent expected to be on retirement incomes of at least the Association of Superannuation Funds of Australia level.
It said this compared to 28.1 per cent for renting couples.
The Willis Towers Watson analysis said the lowest levels of retirement income adequacy were projected to occur among single female renters with 25.1 per cent expected to be on retirement incomes of at least the ASFA modest level, compared to 38.9 per cent of single male renters.
The analysis found that renters as a group were expected to be more reliant on the Age Pension which would form a higher proportion of their post-retirement income.
It also found that the projected retirement adequacy of all groups was very dependent on the level of future investment returns earned on superannuation.
The analysis noted that to the extent that higher mortgage rates required more significant drawdowns from superannuation at retirement, this would reduce the retirement income adequacy of homeowners.
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New research has suggested it’s time to reconsider the home as a fourth pillar of the retirement income system, alongside the age pension, superannuation, and voluntary private savings.
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