Australian retirees should be able to utilize more of their home equity to ensure a more comfortable retirement, according to the Actuaries Institute.
Andrew Boal, chair of the retirement strategy group and Deloitte partner, stated that his research revealed retiree finances are overly reliant on property, which limits their retirement income. “While most retirees own their own home, 60 percent retire with less than $250,000 in their superannuation and, as a result, they’re often living more frugally than necessary,” Boal noted.
To address this, he argues that the national approach to retirement savings needs to change. The institute recommends adding housing as a fourth pillar to the current system, which includes the age pension, superannuation, and private savings.
Currently, over 80 percent of Australians aged 65 to 74 live in their own homes, collectively holding an estimated $1.3 trillion in housing equity, the Actuaries Institute found. However, many do not view their home as a financial asset to be actively managed beyond potentially covering future aged-care costs and as a bequest to heirs.
Unlocking 20 percent of that $1.3 trillion in housing assets could provide retirees with an additional $260 billion, helping fund another 25 to 30 years of retirement. The institute suggests various measures to ensure retirees can access housing capital without reducing their superannuation or pension income.
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