Renting in retirement? You'll need $1m to be 'comfortable'
IF YOU are planning or need to rent your home in retirement, the outlook looks financially bleak.
According to new figures released by the Association of Superannuation Funds of Australia (ASFA), retiree couples living in any of the country's capital cities and relying on the private rental market for accommodation will need more than $1 million in super savings.
Meanwhile, single retirees living in Sydney will need $1 million in superannuation savings of their own in order to live comfortably.
ASFA CEO Dr Martin Fahy said whether single or in a couple, renting retirees in Sydney (that is those without a debt-free family home) were at a distinct financial disadvantage and would need about $1,045,000 and $1,166,000 at retirement respectively to reach the ASFA comfortable standard.
"This compares to $545,000 for a single and $640,000 for a couple who own their own home," he said.
"For a single person renting privately in Sydney, around $320,000 is needed to support even a modest standard of living in retirement, with a couple needing around $450,000 to support a modest budget."
Dr Fahy said one in 12 Australians aged more than 65 live in private rentals.
"Housing affordability and availability is a significant and increasing concern for many Australians and particularly impacts older Australians grappling with the private rental market," he said.
ASFA estimates a single retiree renting privately in a one-bedroom unit in Sydney will need to spend $62,434 annually to be comfortable and a couple renting a two-bedroom unit will need to spend $79,801.
By comparison, ASFA comfortable retirement standard annual budgets for home owners in Sydney are around $43,300 for singles and $59,600 for couples.
"All estimates assume people are enjoying reasonable health, so any serious illness or disability makes the situation even more challenging, as does rental instability and associated costs," Dr Fahy said.
"Compulsory superannuation contributions at 9.5% fall well short of what is needed to support a comfortable standard of living in retirement for anyone renting privately."
Currently around 75% of households with the household head aged 65 and over own their home outright, 8% are still paying off a mortgage and around 8% are renting privately.