Retirees who rent their home in Australian capital cities will need more than $1 million in super savings to live comfortably.
Association of Superannuation Funds of Australia (ASFA) CEO Martin Fahy says renting retirees in Sydney – those without a debt-free family home – are at a distinct financial disadvantage.
Dr Fahy said one in 12 Australians aged over 65 live in private rentals.
ASFA estimates a single retiree renting privately in a one-bedroom unit in Sydney will need to spend $62,434 annually to be comfortable and a couple renting a two-bedroom unit will need to spend $79,801.
That translates to a final super balance of about $1,045,000 for singles and $1,166,000 for a couple.
By comparison, ASFA comfortable retirement standard annual budgets for home owners in Sydney are around $43,300 for singles and $59,600 for couples, requiring a final super balance of $545,000 for a single and $640,000 for a couple.
“Housing affordability and availability is a significant and increasing concern for many Australians and particularly impacts older Australians grappling with the private rental market,” Dr Fahy says. “Compulsory superannuation contributions at 9.5% fall well short of what is needed to support a comfortable standard of living in retirement for anyone renting privately.”
Currently around 75% of households headed by someone aged 65 or over own their home outright, 8% are still paying off a mortgage and around 8% are renting privately.
Housing affordability is a particularly serious challenge for residents of Sydney. Around 65% of Sydney residents are home owners by the age of 60 compared to about 80% for the rest of the country.