Hooray for better housing policy – but don’t forget about retirees

For decades, Australia’s retirement income system has relied on a quiet assumption: that by the time you retire, you’ll own your home.

It’s not spelled out in any pension law or superannuation rule, but it’s built into the entire structure, from how much super you’re expected to save to the income and assets tests for the age pension.

Home ownership indisputably makes a significant difference to your ultimate standard of living as a retiree.Credit: Dominic Lorrimer

If you’ve paid off your home, your retirement dollars go further. Your housing costs are lower. Your safety net stretches. But that assumption is now being shattered.

Currently, 68 per cent of Australians over 65 own their home outright. Another 13 per cent are still paying it off. But among people aged 55 to 65, (those fast approaching retirement), only 36 per cent have paid off their home, while 43 per cent are still carrying a mortgage. The rest are renting, living with family, or relying on other insecure arrangements.

This is no longer a niche problem. It’s a slow-moving crisis. And it’s one that could define the next decade of retirement outcomes in Australia.

There’s a real benefit to owning your own home as you reach retirement. If you own your home outright, you can live on a far smaller retirement income.

This isn’t just about money. It’s about dignity. Stable housing underpins everything.

Your major housing costs are behind you. But if you’re renting in retirement, or still managing a mortgage, you’re dealing with rising interest rates, rising rents, and limited income options.

The age pension and Commonwealth Rent Assistance were never designed for the realities of today’s housing market. A single person on the maximum rent assistance receives just over $5500 per year, somewhere around two months’ rent for a one-bedroom apartment in Sydney, where weekly rents now sit between $600 and $700.

In Melbourne, one-bedroom apartments cost $475 to $550 a week. The maths simply doesn’t work. And if you’re one of the growing number of older Australians still paying off a home loan in retirement? You’re often asset-rich but cashflow-poor, drawing from super or limited pension payments just to stay afloat. And that’s tough.

This isn’t just about money. It’s about dignity. Stable housing underpins everything, your health, your independence, your ability to plan for the future. It’s where you age, and where you anchor your life. It’s what helps people stay connected to communities, services and loved ones. Without it, people fall through the cracks.

We’re already seeing it. Older women who are often single, divorced or widowed, having spent years in unpaid or low-paid work, are the fastest growing cohort of people experiencing homelessness in Australia. Not because of poor decisions but because the system assumed they’d be housed by now – but with the divorce rate now at 33 per cent, the problem is growing, not shrinking.

As we head into a federal election, both major parties are now talking about housing. That’s a welcome shift. But for all the debate about young buyers and tax incentives, we need to make sure older Australians are part of the conversation, too.

And we need to face a tougher truth: if we don’t fix this now – before younger generations reach retirement – the entire system will buckle or require significant change.

Today’s 30-, 40- and 50-somethings are more likely than any previous generation to rent for life or carry a mortgage into retirement. Many are quietly hoping that an inheritance will one day solve the problem, but that safety net looks to me like it will arrive too late.

According to the latest census data, the average age of inheritance in Australia is around 58 to 59. By then, the damage is already done, the rent has compounded, the ownership gap has widened, and the financial insecurity has hardened in place.

So no, we can’t wait for wealth to change hands. If anything, we may need to flip the script and start asking whether grandparents might be the ones who can help their adult children or grandchildren into housing, rather than passing down wealth too late.

So what do we do? We clearly need to help more people into homeownership earlier, well before they reach their 60s, still renting or carrying mortgage debt. That means pulling every sensible lever to make housing more accessible and secure.

And whilst the political arena has presented some options this week, I think we can do much more. We can start by expanding shared equity and low-deposit schemes, so midlife buyers aren’t permanently locked out.

We should be creating smarter incentives to pay down mortgage debt faster – like mortgage-offset contributions through super, or tax-friendly salary packaging for home repayments in the final working years.

When both parties launched their campaigns, they put first home affordability front and centre of their pitch to voters.Credit: Alex Ellinghausen, James Brickwood

Furthermore, we also need to rebalance the tax settings to make the system fairer for home buyers – not just investors. That doesn’t mean scrapping negative gearing, but it might mean capping or targeting concessions more tightly, or ensuring they support the supply of the kinds of housing we actually need.

And we need to stimulate supply, fast. That means encouraging developers to build more of the right kind of housing in the right places: well-located, affordable, appropriately sized homes that people can age in, raise families in, and retire in. Planning reform, faster approvals, and incentives for diverse housing types, from duplexes to mid-rise apartments, are all part of the fix.

We should trial rent-to-buy and build-to-buy models, especially in regional areas, to help long-term renters step gradually into ownership.

We also need to increase access to stable, affordable rental options for older Australians – homes that won’t discriminate based on age or pension status. Not everyone will own, but everyone deserves the right to live somewhere safe and secure.

That includes reviewing Rent Assistance, updating the pension means tests to reflect today’s housing costs, and scaling up housing models that work: co-housing, shared equity, and meaningful downsizing or rightsizing incentives. We need government, housing providers and developers working together to build purpose-designed homes for how we live and age today and tomorrow.

Let’s stop treating homeownership in retirement as a luxury that everyone just magically arrives at. It’s not. It’s the foundation our whole retirement system was built on, and if we don’t act now to modernise that foundation, we’ll leave too many people without anything solid to stand on.

Yes, we need bold reforms. But we also need to stop pretending that the market will fix this on its own. It won’t.

Bec Wilson is the author of the bestseller, How to Have an Epic Retirement, and the newly released Prime Time: 27 lessons for the new midlife. She writes a weekly newsletter at epicretirement.net and hosts the Prime Time podcast.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making financial decisions.

Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter.