While a new report purports that the majority of current and future retirees are likely to be financially comfortable, there is one demographic that will retire into poverty.
The Grattan Institute’s Money in Retirement Report, released on 6 November reveals that “after allowing for inflation, most workers today can expect a retirement income of at least 91 per cent of their pre-retirement income – above the 70 per cent benchmark endorsed by the Organisation for Economic Co-operation and Development (OECD), and more than enough to maintain pre-retirement living standards.”
However, the report identified that for low-income seniors who rent, particularly in Sydney and Melbourne, the problem will worsen. On current trends, home ownership for over-65s will decline from 76 per cent currently, to 57 per cent by 2056. Consequently, a retiree who rents needs a higher retirement income to achieve the same living standard as that of a retiree home owner.
It revealed that, across the income distribution, people typically have enough money to sustain the same or a higher, living standard in retirement as when they were working. It showed most own their own homes and are more likely to be able to afford extras such as annual holidays.
The report uses data from the Household, Income and Labour Dynamics in Australia survey, but reflects the work of the Grattan Institute – an independent think-tank focused on Australian public policy.
Women’s Property Initiatives chief executive officer, Jeannette Large is one of several sector experts viewing the report and subsequent publicity with scepticism, saying it depicted the situation “as not bad as what it is.”
“There’s a group that has been ‘overlooked’, a group of baby boomers we haven’t seen yet,” Ms Large said.
“These are the women who did not receive superannuation contributions early on, have taken time out to have children, returned to work part-time and have walked away from partnerships with far less money than they are entitled to.”
Ms Large said 82 per cent of single parent households were female which limits the type and hours of work they can do. “There is an inequality in society that has to be addressed,” she said.
According to a 2018 Women’s Legal Service Victoria report, women experiencing disadvantage risked poverty, homelessness and ongoing financial insecurity and lacked affordable legal options.
The WLSV project profiled women who had separated, were unable to pay for legal representation and were struggling with joint relationship debts. The majority were from culturally and linguistically diverse backgrounds and had endured family violence, including economic abuse and many were at risk
of poverty and homelessness.
According to WLSV, superannuation was their only
significant asset, and as reiterated in the Grattan Institute’s report, “Women, particularly single women, are at greater risk of poverty, housing stress and homelessness in retirement.”
While a man aged 60-64 (in 2015-2016) could expect to retire with average superannuation savings of $270,710, for a woman of the same age, it would be $157,050.
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