Josh Funder
Household Capital, a leading Australian provider of home equity retirement funding, said today the results of its latest quarterly survey of older Australians showed 78% of retirees were concerned, or very concerned, about about the federal government implementing an inheritance tax.
“We are heading into a federal election where more than 50% of eligible voters will be over 50 years of age,” said Dr Joshua Funder, Chief Executive Officer of Household Capital. “There is real concern among older Australians about the threat of new taxes that could negatively impact their retirement plans.”
The survey was undertaken by Household Capital in partnership with Your Life Choices. Each quarter, over 5000 Australians over age 50 respond to the detailed survey to have their voices heard on the major issues they face. The survey is structured in collaboration with UNSW/Centre of Excellence for Population Aging Research.
Dr Funder said that after two years of living with the threat of COVID, and in and out of lockdown, older Australians understood more than ever the value of the family home as a safe haven and the preferred place to live during retirement. “Home is literally our castle against COVID,” said Funder.
Other key findings of the survey included: more than 74% of retirees were concerned about being forced to sell their home to fund retirement; more than 74% of retirees were concerned that the home would be included as part of an assets test; and 73% said they were concerned, or very concerned, that they would be forced to use the Centrelink Home Equity Access Scheme.
“It’s critical that we improve the awareness of the family home as the best place to live and the right way to help fund retirement,” said Dr Funder, noting that rising house prices, the main store of wealth and bequest for Australian families, have appreciated around 20%.
“That means the value of home equity saved in the family home is now worth three-to-four times a household’s superannuation savings,” said Dr Funder, adding the survey also revealed that 70% of retirees believe their investment returns will be inadequate and have a negative impact on their lives.
“We know government welfare alone cannot meet the retirement funding needs of the nation. Accessing private property in home equity must remain a voluntary, self-funded option available to retirees, not a tax and certainly not at the expense of existing entitlements,” said Dr Funder.
Urgent need for improved retirement incomes
Irrespective of current income levels, 80% of older Australians stated their ideal retirement income would be $1,000 to $2,000 per month more than their current income. For some, their retirement income is barely covering necessities, particularly for those reliant on the Age Pension.
Some of the statements posted by retirees in the survey express the urgent need to improve national retirement funding:
“Retirement in Australia is appalling. You have to survive on a minimal amount of money, living below poverty line.”
“I’ve adjusted to living in a frugal way, buy most items at op shops and buy groceries from the clearance aisle or when they are half price.”
Self-funded retirees are also finding it challenging to make ends meet. Persistent low interest rates and rising costs are impacting across the socio-economic spectrum.
“As a self-funded retiree, the low investment rates are of huge concern and continue to have an impact on our retirement plans.”