More Than Just a Roof

While more than 80% of people currently aged 65 to 74 live in their own home, many of these ‘asset-rich, cash-poor’ retirees are living more frugally than they need to. 

More Than Just a Roof: Changing the Narrative on the Role of the Home, a Dialogue Paper written by actuary Andrew Boal, argues that we need to change the narrative so that it is more acceptable to access and spend part of the equity that has been built up in the home. 

In brief: 

• It will take another decade or two before most working Australians will have had compulsory superannuation contributions of 9% or more throughout their working lives. 
• There is an important and interdependent relationship between the home, superannuation and the Age Pension when considering retirement outcomes. It’s time to give more voice to the home as a separate fourth pillar of our retirement income system. 
• Key areas of reform to focus on in relation to the retirement phase include:  
  • improving financial literacy; 
  • addressing the financial disincentives to access part of the wealth stored in the home through sale;  
  • encouraging use of home equity release schemes by maintaining the Age Pension means test exemption on any amounts released as well as allowing those amounts to be deposited into superannuation; and 
  • reducing the incentives to store wealth in the home, thereby improving equity in the retirement income system across homeowners and renters.

Dialogue Papers are a series of papers written by actuaries and published by the Actuaries Institute which aim to stimulate discussion on important, emerging issues. Opinions expressed in this publication are the opinions of the Paper’s authors and do not necessarily represent those of the Institute.