Renting retirees seem to have been left out of government policy settings when it comes to retirement income, with new Milliman research finding that a retiree without a home should be prepared to find an extra $500,000 in superannuation savings to fund the same lifestyle as a homeowner.
The findings showed that a 65-year-old “urban renter” retiree would be forced to spend an extra $15,000 per year more than the “nationwide” retiree, with nearly half of their budget allocated to rent. By age 85, the urban renter would be spending more than $20,000 a year above the expenditure of nationwide retirees who own their homes.
Urban renters, which require more than double (one million as opposed to $500,000) the funds of nationwide retirees, also face arbitrary policy settings which favour homeowners, for example low levels of subsidy.
With one quarter of retirees expected to still be paying off a mortgage or renting in retirement and recent trends show declining home ownership, Milliman suggested super funds delve a little deeper into their membership to understand their circumstances before offering advice.
The consulting firm said in some cases, Australians might be better off diverting savings towards home ownership rather than superannuation.
Superannuation funds have thrown their support behind the QAR reforms but want a “clear statement” that they will not be required to check all member SOAs.
In its latest report, the corporate regulator says the deduction of advice fees has led to instances of “inappropriate erosion of members’ balances”.
Financial advice is having a significant impact on how Australians are engaging with the more complex aspects of their superannuation, new findings have shown.
While the Financial Advice Association Australia said it supports a performance testing regime “in principle”, it holds reservations about expanding this scope to retirement products.
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