Housing stress and retirement

There’s a cosy notion that most retirees enjoy housing security as they live in a home that they fully own.

This is comforting, but far from true and becoming a rarer situation.

The 2020 Retirement Income Review summary showed that:

• 76% of Australians aged 65 or older own their own home
• 12% are renting
• 11% live in ‘other arrangements’ which could mean rent free, residential care, couch surfing or similar
• Of the 76% who ‘own’ their own homes, 12% held mortgages in 2019

Now let’s shift our gaze a decade or so younger. The Retirement Income Review notes that the proportion of pre-retirees (age 55-64) with mortgage debt is just over 50%.

The big question is whether the 50% with a mortgage will pay it off entirely by the time they hit 65, to keep the status quo of 12% mortgage holding homeowners in retirement?

Or, as is more likely, are we about to see mortgage repayments dominate retirement spending for more and more people?

Yes, there are other options – downsizing, selling out, using super to pay off the mortgage. But all of these options are trade-offs. The rules associated with each strategy tend to be both complex and confusing and concerns about trust and financial advice continue to bubble away. Many retiree homeowners are like rabbits caught in the headlights – to downsize or not is both a personal, accommodation, financial and geographic equation that currently feels all too hard.

But perhaps the aspect that is often overlooked in the housing shortage debate – arguably the most important – is that our homes are far more than shelter or access to funding. At their simplest level, they are us. They are our sanctuary from the world, our place of comfort, security and spiritual nourishment. That is why access to secure housing is listed by the United Nations as a basic human right. The need to have a secure place to which to retreat and rest is primal. Remembering this may help us understand why more housing is needed urgently, why compassion should guide the discussion – and why solutions that suit all generations should be top of the list.