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Super needs to offset falling home ownership
Significantly more Australians are retiring without owning a home, placing higher importance on addressing superannuation balances earlier, according to REST Industry Super.
Currently just 15 per cent of retirees do not own their own home, but in the next 5-15 years 20 per cent of individuals will be retiring without owning their own home, and in 15 to 25 years time that is likely to have risen to about 25 per cent, according to the ‘Home Ownership and Superannuation’ white paper, commissioned by REST Industry Super and authored by Louise Southall from The Right Research in May 2011.
Home ownership rates for people under 35 have fallen from 45 per cent in 1995-96 to 37 per cent in the most recent figures from 2007-08, and if they continued declining at this pace may have dropped as low as one in three by now, the paper stated.
REST Industry Super chief executive Damian Hill said the finding had implications for policy makers, super funds, planners and individuals, because an increased portion of people’s retirement benefits will be needed to pay off mortgages.
Individuals will need to start showing an interest in their superannuation earlier, through strategies such as making extra contributions or changing their investments options, he said.
“[Buying a home] is a huge commitment and it’s not getting easier. People need to have fallback plans, and think about if it doesn’t come off or if you need to use some retirement savings to pay off debt,” he said.
The research also highlights the importance of raising the superannuation guarantee from nine to 12 per cent, Hill added.
Super funds have a responsibility in educating their members about making the most of their retirement nest-egg, and the industry as a whole needs to continue to talk as simply and regularly as possible to members and the public at large about the importance of super, according to REST.
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