Owning your home in retirement is an important goal

Attractive Happy Senior Chinese Couple Sitting on the Front Steps of Their House illustrating home ownership

Image: Andy Dean Photography/Bigstock.com

Owning your home in retirement is a huge aid to financial security. In a Your Life Choices post, Kaye Fallick wrote, ‘Owning a home is critical to your retirement affordability prospects.’

‘What is becoming increasingly apparent is that the single greatest advantage in retirement is not the level of your savings or superannuation but whether you fully own your family home, if you have a mortgage, or rent.’

Owning is best because you avoid increasingly high rent costs, but also, she says, you have equity in your home that might be downsized to improve cash flow. ‘The home is now considered by most reliable economists as the fourth pillar of retirement income.’

Swinburne University research discovered an increasing number of older people in Australia ‘experiencing housing insecurity and impoverishment in retirement’. These tend to be single-person renters, but the figure does include couples.

Some 426,000 people over the age of 50 are living alone or as couples in rental properties. That number is expected to rise to 606,340 in 2030 and almost double to 800,000+ in 2050.

The research discovered that current retired renters ‘have little wealth and women tend to be somewhat poorer than men’. Older renters tend to manage rental increases by moving to low-cost areas on city fringes or in the country—or going down in size and quality.

In speaking about the report, lead researcher Andrea Sharam said, ‘Housing is probably the key way of generating wealth, but people who are unable to purchase or fall out of home ownership will find that they don’t have as much wealth in retirement.’

Home ownership is becoming increasingly difficult. Most retirees up to this point have begun retirement owning their home. That is changing quickly. The number entering retirement with a mortgage is growing.

But, ‘for the vast majority of retirees who are renting, the sums simply don’t and can’t add up,’ says Fallick. ‘They cannot cover the rising expenses of energy, fuel, health insurance and rent.’

All of this makes a strong case for home ownership.

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

Category: Finances

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