Ten years ago I did a study into ageing and wealth. At the
time, I called the study “old poor and lonely” – given this more or less summed
up the picture for the typical retiree. Surely, a decade later on, things have much
improved?
It depends on where you sit. Only a third of people aged 65
today are what you’d call self-funded retirees (in that they do not rely on the
pension). This doesn’t mean they are well off though: fewer than 10% of superannuation
accounts of people retiring today are of more than $1million. The
superannuation industry tells us that for a “comfortable” retirement, you
should ideally have around $700k in super for a couple. This assumes you own
your own home outright. The median (halfway
point) of superannuation accounts of 65-year-old male today is only around $250k.
For women, it’s less – around $180k to $200k. So half the retiring population
has less than that. Think about that.
Roughly two thirds of today’s 65-year-olds will retire with
some sort of age pension – full or partial. Those who are primarily reliant on
the age pension are roughly half the retirees.
Dig further into the stats and we find that around one in
seven retire as renters. This is much higher amongst singles, especially women.
Around 60% to 70% retire owning their home with no mortgage, and the rest have
a mortgage going into retirement.
Around in one four of today’s retiring 65-year-olds are
single. This increases for older cohorts because women live on average longer
than men. And while on that, those retiring at 65 today can expect on average
to live another 20 years. That’s a lot of retirement to fund.
For the typical Aussie retiree in 2026 it’s not a brilliant
picture. Of course, the super industry,
financial advisors, cruise ship marketers (!) and others who feed from the
retirement savings of Australians will typically invest more energy targeting the
top 10% with solid super balances and who own their own homes. Preferably
expensive ones.
For the rest, however, who may have slogged through life in
jobs that put stresses on their bodies, or who lived in rural and regional
areas, or even those who lived in the big cities but on modest incomes – retirement
will be a long way from the happy images of pastel cardigan wearing white haired
seniors with perfect teeth strolling the beach with their designer dog and not
a care in the world.
Who can blame them for their political annoyance when they
read of extensive NDIS fraud, bungled infrastructure projects costing billions,
wasteful government advertising, unrestrained immigration or outrageous salaries
for senior Canberra bureaucrats or University Vice Chancellors? Little wonder
so many seem have drifted to the angry political corner of One Nation.
Australia is moving away from its more egalitarian roots to
a society where a smaller number of haves are calling the shots. Half the
country shares in only 5% of the national wealth. The wealthiest 10% control
about half the nation’s wealth. The retirement story reflects this divide.
Sure, for those with small super accounts but who own the
family home, there are ‘downsizing’ provisions which allow them to tip an extra
$300k per person ($600k for a couple) into super if they sell the family home.
But they still need to live somewhere, and the options for seniors are limited.
An independent living unit will set you back typically around $500k, and easily
more for the more salubrious product. Plus there are the weekly fees and the
deferred management fee to think of. The industry caters more for the higher
end.
If you have to move into aged care later in life, the
options shrink again. Just getting a place in aged care can be harder than
getting your first born into an exclusive private school: waiting lists have a
different meaning if you’re in your late 80s and urgently need supported living.
The state of our aged care system in Australia and some of the abundant horror
stories tell you that, unless you’re reasonably wealthy, you’d probably prefer to
be dead than going into some of the aged care places.
Why my sense of dismay? I’m not painting a picture of my own
future (at least I hope not) but I am deeply saddened that a nation with such
abundant wealth and resources has so dismally failed the generations that
helped build that very wealth for others to squander. In the ten years since ‘Old,
poor and lonely’ it looks very much as if we have done little to change what
was a predictable future.
Clint Eastwood famously said, “getting old is not for
sissys.” But that doesn’t mean we should
make it a herculean challenge for those who live through it.
