Family homes at risk
The National Centre for Social and Economic Modeling says that most 50-to-64 year-olds typically have only accumulated just $56,000 in superannuation, and many people will be forced to sell the family home to pay for health and aged care costs in retirement. NATSEM director Professor Ann Harding said that the average 50-to-64 year-old has around $240,000 in accumulated wealth, but half of that is in the family home. The rest, plus the aged pension, would mean that a single older Australian would earn less than $20,000 a year, which is about $7,000 less than financial planners recommend.
This will mean that most Australians will have to curb their lifestyle in retirement, and as they start running up big bills relating to health care as they grow older, the funding for many people will have to come from selling their houses.
NATSEM’s report warns that unless Government spending and tax concessions are well aimed, the children of these retirees will face huge tax burdens to pay health and aged care costs of their parents and forebears. The Centre suggests options such as removing the 15 per cent contribution tax and/or the taxes on earnings, encouraging more superannuation contributions and raising employer contributions.
Last week the Minister for the Ageing, Kevin Andrews, said that people believing that compulsory super contributions would be enough to retire on should “think again”, a view supported by NATSEM’s report.