How important is it to own your home for retirement?

Image: Aaron Amat/

The question seems like a no-brainer, with ‘very’ as the obvious answer. ‘Home ownership provides retirees with big benefits,’ says the Grattin Institute, ‘they have somewhere to live without paying rent, and they are insulated from rising housing costs.’

That’s good news.

Here’s the bad news.

Home ownership is falling among 55-64 year-olds. In 1995-96 72% of them owned their home outright. The institute reports that ownership had fallen to 42% per cent in 2015-16. Another report suggests the trend will continue and estimates that, by 2031, unmet demand for public housing by older Australians is likely to rise by 78%, with more than 1 million in housing poverty.

The fourth retirement pillar

A few years back (2016) the Australian Senate set up a committee to look at economic security for women in retirement. It had the catchy title: ‘A husband is not a retirement plan’ (who said politicians don’t have a sense of humour?).

The report noted that some were calling for home ownership to be raised to the ‘fourth pillar’ of retirement. The first three pillars are the Age Pension, compulsory savings through superannuation and voluntary savings for retirement (in whatever form, including home ownership).

‘Fourth pillar’ or not, owning your own home can be incredibly helpful.

Ownership two step: Awareness and action

We had no interest in buying a house for a number of years. We were shifted around fairly regularly by our employer and lived in subsidised rental properties. Why bother owning a house?

Then, I noticed several older colleagues retire and struggle financially, mainly because they had to pay full rent. That was our awareness moment. We decided we needed to own our own house.

Action? First to our bank to find out what they thought we could afford. Then to find a house. We wondered how we would ever pay off the—now laughable, but it wasn’t then—$72,000.

Your story will be your story. However, it’s worth doing some homework to see if home ownership can be part of your story.

The advantages of owning your home in retirement

There are several:

  • It can’t be sold from under you.
  • If there’s a financial emergency, you can use the equity in your house.
  • While various costs may rise with home ownership, they won’t be as much as rent (your landlord will likely pass on the same costs to you).
  • The value of your house will rise over time.
  • If you have to move to a smaller residence, you have an asset to sell.
  • It’s yours.
  • What can you add to this list?

But, what if?

So much for the advantages, what if you can’t or, as some decide, don’t want to own a home?

The best advice is this: Get professional help—a financial planner, for example. That’s to help you understand your financial situation for retirement. And the realities that may bring.

A good financial planner can also help you understand how to set yourself up for the best financial outcome for retirement. But make sure you’re dealing with someone who understands you and you are comfortable with.

It’s worth the effort to find the best retirement advice you can.

Bruce Manners: the author of Retirement Ready?, Refusing to Retire, and founder of

Category: Housing, Learning, Mortgage

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