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.