The third in our series on the Government’s Retirement Income Review
Home ownership gives retirees a big leg up in retirement, according to the government’s recently released Retirement Income Review. Retiree households who own their home face lower housing costs. On average housing costs are just over 5% of disposable income for couple homeowners vs about a quarter of disposable income for renter couples. And those owning their home are less likely to face financial distress than retirees who rent. Almost one-quarter of retirees who rent privately are in “financial stress” vs only 5% or so of homeowner retirees.
Does the age pension system adequately address these issues?
One of the key focuses of the government’s study of the retirement income system was equity: Is it fair?
For many people that probably depends on your perspective – Do you own your home or are you a renter? Let’s start by looking at some of the advantages of home ownership:
- The value of the house isn’t included in the assets test. So, retirees can own a very valuable property and if their other assets are below the assets test, they still can qualify for the Age Pension.
- Home owners spend a significantly lower portion of their income on housing than renters. 5% versus 25% for renters.
- The tax system favours housing by exempting the family home from capital gains tax.
It isn’t black and white however as the Age Pension system has some additional benefits to help renters. These include:
- First, the assets test limits for renters are more generous than for homeowners. For example, a single renter can have assets of $482,500 vs $268,000 for the single homeowner ($616,000 and $401,500 for the couple renter vs homeowner respectively) and still receive the maximum Age Pension. You’d think that would be a significant benefit but it turns out most renters can’t take advantage of that as only a very small portion of non-homeowners have assets between the two levels.
- Second, the Commonwealth Rental Assistance is designed to help narrow the gap. It’s a supplement available to retirees who are renting and is means tested with the Age Pension. The payment is based on 75% of rent paid but capped at $139.60 per fortnight for singles. This is terrific in theory but as the Retirement Income Review points out:
- Market rents in some areas significantly exceed these caps.
- The maximum value of Commonwealth Rent Assistance has not kept pace with market rents, especially for low-income renters.
Home owners often feel they shouldn’t be penalised for working hard to pay off their mortgage and some begrudge the additional assistance given to renters. On the other hand, even with that assistance, the Review concludes there is no doubt that renters find it much harder to make ends meet on the Age Pension. Fortunately, for Australia overall, home ownership remains very high for retirees – about 76% of those over 65. But that doesn’t help the renters.
So what do you think – Should more be done to help renters living on the Age Pension? Tell us what you think by commenting below.
The best assistance aged single. renters like myself could get is secure, adequate public housing.
I am single, worked hard to payoff my modest Duplex, never spent money on flash hotels or travel. Why do the renters that have spent everything they have earnt get to cry poor in retirement.
I agree. Those who have chosen not to live within their means and save for their future should not be helped more than those who have.
You can’t generalise why someone is renting. You don’t have a window into their circumstances.
Hundred percent agree with you.
I have worked hard all my life in not for profits never could save for a deposit no assistance from can’t so renting only option the gov need to give housing options for those of us nearing the age pension single and the gap is not going to cut it provide affordable rent properties happy to stay working till I drop to keep a roof over my head tough one the stats are very high for single women who have worked all their lives
Dear Christina J,
Good on you for paying off your duplex , Whilst me an My Ilk live from week to week on Casual/part time hours , I can ‘t wait for the weekend to start partying planning my next ski trip Perisher or Aspen ?. How about a bit of empathy for your fellow human being !!. GET Real
I do not mind who gets what. BUT what the renters need to understand is that HOME OWNERS, have to pay are rates, insurances and maintaining their homes. I know many renters in their fifties and their attitude is OH WEll it will be fine and continue on with their lives , re coffee shops, restaurants etc. HOME OWNERS like me cannot afford to go to coffee shops. I am single 65 just left a job, sat down today after eight weeks put pen to paper and I CANNOT afford to live on the pension
All who retire should be treated equal with pension payouts. I know many who have squandered savings for holidays, boozing and gambling. Their choice, but I chose to invest my spare cash into my home ownership and now reap the benefits.
I’m happy to pay tax on my investments and pension if I breached the threshold but pay me my equal share of pension which I paid into during my working life.
Don’t pay extra into Superannuation as any tax break whilst working are taken back each year to the tune of approx $35,000 if you don’t qualify for any pension!!! (Couple)
Our system is unfair and clobbers the people who were workers and backbone of nation in yester year!!!
What about those home owners who still have a mortgage to pay
They get nothing
Agree.
I am 68 years of age and still work part time to pay off our remaining mortgage, yet our pension is reduced quite substantially due to my income
My husband is 71 years of age and until a year ago, due to ill health was working full time.
We have little in assets apart from our home which we have downsized.
I feel the income I am able to earn part time ,due to necessity, should not be penalised.
The government could make life a lot easier if they allowed the younger person not yet at pension age to also accrue an working credit as does the person at pension age. Doesn’t make sense if I work, they take away immediately from my partners pension whereas he has a working credit can earn $300 fn and they don’t touch his pension. Maybe the credit could be shared between both.
I’m shocked at some of the harsh judgmental attitudes towards renters as frivolous spenders who never saved. Renters are mainly low income single people trapped in poorly paid jobs who dreamed of having a secure roof over their head only to find no amount of penny pinching could bring it within reach. Many home owners had a leg up but would never admit it. Cast not stones when we need more compassion and to work together to pressure government to do better by all retirees.
I totally agree with you. I am 65 and working 2 days a week to continue paying my home mortgage. I have raised my now adult children by myself, working in two jobs to make sure they had an education and a roof over their head. I received no maintenance support and I did not ask the Government for anything. Most pensioners have worked hard all their lives and have not taken anything for granted. I am grateful for everything I have, my health, my family and my friends. This is what keeps me going when I think of the Government not respecting us as Seniors or Pensioners. I wish you all well with all your future endeavours.
What about an old age retiree who live in his own home (like me) but finds it physically difficult and otherwise expensive to maintain the home garden like lawn mowing and weeding? Can they get help or financial assistance ?
The Government owes us nothing. We are lucky to live in this country which supplies a generous aged pension, even to people who have never worked. Sometimes we should take responsibility for ourselves. Life is not equal for everyone, but that is life. Last year, the aged pensioner received quite a few generous bonuses and still we complain. We should be happy and live within our means
The government does owe us. We pay tax all of our working lives (fact check….Aust. is one of, if not the, highest tacing nations Income, local, state, GST, levies – the list is almost endless). The government cannot muduse the nations title as Common-Wealth and just take… there comes a time (retirement) when they must give back!
I think the rent assistance as with the pension itself needs to keep up to date with Real inflation and not with the insignificant items that are currently taken into account. Like with private health insurance there are certain products that the aged utilize that are not counted into the inflation figures and therefore any increase lowers the standard of living for pensioners.
The Gov does owe us. We paid into system to have the society infrastructure of today. A portion of taxes is taken for pensions.
All who retire should be treated equal with pension payouts. I know many who have squandered savings for holidays, boozing and gambling. Their choice, but I chose to invest my spare cash into my home ownership and now reap the benefits.
I’m happy to pay tax on my investments and pension if I breached the threshold but pay me my equal share of pension which I paid into during my working life.
Don’t pay extra into Superannuation as any tax break whilst working are taken back each year to the tune of approx $35,000 if you don’t qualify for any pension!!! (Couple)
Our system is unfair and clobbers the people who were workers and backbone of nation in yester year!!!
I find the figures a little hard to believe because surely home owners have the expense of the upkeep of the home.
Also they have the cost of council rates and water rates.
My thinking too Graham Ianson
Here on the gold coast,just for water ,rates and house insurance it costs $100 per week to live in your own ,modest home
I think home owners and Renters are in the same boat not enough to live on with the rising costs of living
Ross Robertsons comment is the elephant in the room, to date there is no fairness for home”owners” who are still paying off the mortgage.
Also individuals who are not good with managing their finances through out their working life could well make up a reasonable percentage of renters who still cannot manage to live within their means. I understand that this certainly doesn’t apply to those who faced hardship and found themselves unsupported due to some very hard knocks in life. However all aspects and circumstances need to be considered. In this.
As per usual those that have done the least to provide for their retirement get the most. Those that have lived a frugal fife style, built up a super account and built a share portfolio are then expected to pay
Here on the gold coast,just for water ,rates and house insurance it costs $100 per week to live in your own ,modest home
If it’s good for the crooked politicians to work with pension so should all workers to live comfortable good for the goose good for the gander Joe Hockey 90 thousand pension knocking out 400 thousand go figure
As per usual those that have done the least to prepare for their retirement will get the most. Those that have lived a frugal lifestyle and built up a superannuation account, bought a house, built a share portfolio and made other wise investments are expected to continue paying.
I’m with Graham on this one I too find the figures hard to believe. The upkeep of the home alone can run into thousands of dollars when things go wrong but are essential in running the home. Then add to that the rates etc and any repair work not covered by council, you have a hefty yearly outgoing.
We strove for years to save. To own a home.
Only now to be penalized and not even receive a health card.
We have ongoing home maintenance expenses and Council Rates etc.
We have friends and colleagues that have earnt far more than us.
They spent it all. Now they are crying poor and claiming everything they can.
We feel discriminated against. This is AGE DISCRIMINATION.
We thought you were not allowed to be discriminated against in Australia.
All Seniors over the age of 65 should be treated equally and receive a health card.
All Seniors regardless should have access to home help.
It seems that the more you save in Australia the more you are discriminated against.
How’s about just helping everyone by increasing the Age Pension by 10-20%, and doing away with, or reducing, the tax relief on super payments (35% for very income earners) to fund it?
It is essential that there are adequate stocks of social low cost housing. Working hard is not always sufficient to make you financially secure. A wealthy democracy should have a large safety net. If you don’t want one for humanitarian reasons then self interest will do. A society with a large underclass is not a safe one
I agree, the upkeep of a home is very expensive, when you have no income and you are only relying on a pension from your super. This is not taken into consideration when applying for a pension. I can see our hard earned savings gradually becoming less and less. I wish now, I had spent a bit more of our savings, instead of saving for our retirement.
The system should not encourage Retirees to be Renters. Those who are Renters for whatever reason, need to be able to pay the rent. However,to be fair, whatever they receive as Rent Assistence should also be paid to Home owners………call it what you like but it will be towards insurance, rates, repairs, mortgage, all the costs which Owners incur that Renters don’t. It takes years of sacrifice to be a Homeowner.
The Government should be looking at increasing the home ownership rate not give aways at the end. Have some foresight not fix up mode
The age pension system discriminates against those who have worked hard and sacrificed their lifestyle to own a home. But bizarrely it also discriminates against people who want to keep working. I plan to retire soon, using the age pension and drawing from my super to enjoy a modest lifestyle. I could continue to work one day a week, but if I did I would be penalised 50% of my income through a reduction in the age pension plus have to pay around 20% in tax on that money. So effectively the government claws back 70% of what I’d earn. Why would I bother!
Bleat, Bleat.
i worked and paid TAX all of my life from 16Yr to now 72 and still paying TAX. People around me thought I was stupid buying a house and saving –a waste of money when you can go out travel, go to restaurants and have a good time.
Well now that they are over 65 they are bleating and want further government (TAX PAYER HAND OUTS) I am left with NO pension and NO government medical card what a joke.
It seems as though the harder you work the more penalties you cop in old age
TOTAL Discrimination
Additional comment
My advice to young people is; If you have any aspirations to get ahead in life and be penalized for working hard and saving we in AUSTRALIA have a great socialistic Outlook.
If you don’t want to work the taxpayer will pay for everything you need, go into a commune and pool your money
My thoughts are that the value of pensioner’s own homes should be limited when age pensions are being assessed – say to $500k. Anything over that would be included as an asset. Folks I know have houses worth over $1million and still get an age pension.
As usual, the selfishness is on display for all to see. Generous concessional tax treatment for retirees in both accumulation phase and “pension” phase. Houses exempted from assets test. Negative gearing. To lump all renters into the same basket and say they shouldn’t receive modest rental assistance is easy to do but lazy. No one has bothered to mention housing affordability as an issue for low income or disadvantaged groups. No wonder baby boomers have such a poor reputation. There are many complex issues involved and you all might do better to do a fairer analysis. We work hard (69 and 70) have our own house, receive generous tax concessions for contributions to Super and our advantages far outweigh the modest assistance renters get.
Well put Peter Williamson. The sooner death taxes are introduced and the accidental wealth created to those fortunate to have had life treat them well, accidentally or artificially, in so-called markets (i.e., real estate markets) but are really dodgy dog-eat-dog arrangements, the better able we in Australia will be to avoid the deep social disharmony currently presented in the USA. Housing, health, food, and education should be regarded, at least to some extent, as public goods available to all citizens. And of those ‘hard-working” individuals who like to brand renters as somewhat defective in wealth accumulation, ask how many got their break as the result of inheritance, not hard work at all.
How can the Government get this so wrong !!!
Simple answer
Get some BALLS and make the corporate companies pay taxes
Problem solved
I had to pay 48 cents in the dollar to help all the bludgers who are allowed to vote and to cry poor
and the government is frightened they don’t have enough money to support the renters
If I did not pay my taxes I would go to jail !!!
Does BHPB even think about that
in their Singapore office
Okay say I worked all my life in a good job and so did my Neighbour we both earned the same money paid the same taxes however he spent all his on holidays toys gambling and rent and I saved and bought a house through life sacrifices
Okay he gets a pension and I don’t
Is that fair ?????
So I decide okay Centerlink I am going to sell my house take all my super and the money from the sale of my house invite the media to come with me go to the Crown Casino and place all my money on Red
Disaster I lost it all so now I am in hardship so I ask the media to come with me to Centrink and I tell them I have no money no house no super can I please have a pension now because I worked and paid taxes for it
Sorry they say you squandered all you money in one hit you can’t get a pension you should not have done that
I say hang on my workmate squandered his over 50 years and he gets a pension why can’t I ??
So just vote for a government that will make employers and employees pay at least 25% tax and if you are over 65 and still working you should not have to pay any tax
Great country just stupid knee jerk politicians running it who are frightened to face up to the cash rich corporates tax wise
The self funded retirees should be applauded for the sacrifices they have made over their entire working lives not to be dragged down by stupid government policy just to stay in power
They would all like to live in Putin’s Palace !!!
What’s next 2.5 cents per kilometer for an electric car because they don’t use petrol so the roads and infrastructure can’t be paid for through the petrol tax
O we are back to where we started
Just get the corporates to pay their taxes and we can have great roads and help global warming targets
With no taxes on electric cars
My wife and i have worked all our lives to own our home but if you squandered your money
and rent instead you receive rental benefit but we don’t get any assistance to wards rates or maintenance on our home . The government as it all wrong in all facets of center link payments.
I have worked extremely hard and gone without to make a life for myself. Only to find that people who have no responsibility and squandered their money are rewarded by the Government. I could have gone overseas, restaurants, flash cars, take away food, or piss it up against the wall. No, I was responsible and made sacrifices along the way. people only live from week to week should not be rewarded.
Well said Carol. I agree all Australians over retirement age should be entitled to some assistance. We are self funded retires saved for our future and feel we are being penalised for it. We receive no government funding. At the moment we are independent but I worry what costs lie ahead of us in the future
1.Lets start by blowing up pokies.
2. Stop people from taking thier super as a lump some. Unless it is going toward an asset.
3. America calculates a persons pension on thier contributions over thier working life. Might make people get a job.
4. If you penalize a person from owning a home and you penalize a person from being an investor, what would that do to future?
Any system that encourages you to spend as much money as possible from your nest egg to get retirement benefits i.e. pension or health care card seems to be short sighted.
If you have worked & paid tax all your life (with a minimum requirement) you should get a fixed pension amount regardless of assets or income.
It would seem that the amount of work undertaken by Centrelink to keep assessing the ever changing figures for pension calculations would pay for this by drastically reducing costs.
On the opposing side of the fence if the government is trying to make us pay for our own retirement why is there a cap on the amount you can make in concessional contributions (I know the tax implications) & minimum draw down amount on a superannuation fund allocated pension? This makes you take more than you may need as living expenses & makes this a larger percentage as you age when you probably need less.
Both my husband and I started work at 15 and worked hard until retirement. He had an accident and had to leave a good job to take on an easier one. We saved and paid off the home before retiring. We now get a small part pension and the government discount on Water etc. If people worked all their life or most of it on average wage they should get rent assistance to help them with the pension. but if they got very good wages and just did not save then they should not get rent assistance.The gov could say over e.g. $1500.00 per week for x number of years. The lady who said the house should be counted I agree with but it has to be in the very high bracket as most people live in moderate homes and worked hard to buy it and should not be penalise. There are people in our area who have never worked and just get gov assistance for ever they also should not get rent assistance on pension age.
The asset test is a joke.just because you have acquired assets while you are working house cars boats caravans house contents etc you cant get a full pensionthese assets are not cash.You are forced to sell off assets to be able to pay your bills.
You get penalised for not being a renter
Under the current assets test i get 1/2pension because we own our house if I was a renter I would get rent assistance and full pension.
The assets caps should be the same for renters and home owners
I personally think its so unfair that people who have not ever worked or pay taxes receive the same benefits as people who have worked hard and paid their share.