Is retirement a thing of the past?

Above: Associate Professor Catherine Bridge

By Yasmin Noone

The concept of retirement in Australia — the once branded ‘lucky country’ – could eventually become a thing of the past, with projected home ownership rates due to drop dramatically over the next 40 years, forcing non-home owners to continue working to to keep the roof over their head.

The new peer-reviewed Australian Housing and Urban Research Institute (AHURI) paper, Age-specific housing for low to moderate-income older people, suggests that by 2051 only one in 40 people aged 65 will own their own home.

One of the co-authors of the report, Associate Professor Catherine Bridge from the Faculty of the Built Environment at UNSW’s CityFutures Research Centre, commented on the flipside of the demographic data where, in the future, 39 of 40 people will not have secure lodging and must continue to work, at least on a part-time or casual basis, to afford the rent or mortgage repayments.

“We’ve got a massive undersupply of [affordable housing] and we’ve also got a situation where, by 2051, the demographer’s projections say that only one in 40 will own their own home,” said Dr Bridge.

“At the moment, around 76 per cent of people [in Australia] are homeowners outright.

“That marks a massive drop…and it implies that, basically, people will reach age 65 with an insufficient income to actually retire [totally] or enter the home ownership market.

“So, what that [statistic] is flagging is that people’s choices about retirement will have to change as you can only afford to retire if you can predict a reasonable income stream and have security of accommodation.”

This projected scenario, Dr Bridge said, gets even more problematic when the older person’s health declines and they are unable to continue working.

“The Productivity Commission (PC) recommended that people should be able to access the equity from their home through a reverse mortgage-type scheme. But that won’t help a huge amount if a large number of people are not homeowners.

“…The government might then step in but what are they going to do?

“The older person will have to choose between continuing to work or downsize [and receive care in the home] but this presumes they will find somewhere cheaper to live. At the moment there is the tree-change, sea-change trend but the infrastructure is just not there [in these destinations].”

And if neither of these two options apply to an individual, then “that’s where they either become a burden on the health care system or on the aged care sector”. The cost of looking after this group will then, consequently, borne by the tax payer.

Dr Bridge said despite the negative projection, there are a number of policy measures available to the government to avoid the predicted scenario and encourage an increase in the supply of age-specific housing stock.

“We have policy silos but no one is actually coordinating it from an older person’s perspective.
 
“We need to manage the situation more strategically. We do need better coordination [between the different levels of government] and then think about how tax reform, housing and aged care reform will work together.

“And that all needs to be thought of in the context of government support, disabilities, pensions and how income and assets are dealt with.

“We also we need to think strategically about where older people are actually living and where they are likely to live in the future. And then they need to make sure accommodation is appropriately placed for inclusion and participation.”

However, if all things remain equal and specific action is not taken, Dr Bridge believes the projections will eventually be realised.

“If we don’t deal with the issues appropriately there will be perverse outcomes.
 
“…The better we can manage this situation, the better the Australian economy will be in the future.”