Retirement policy lags demographic changes
AUSTRALIA'S traditionally robust retirement system has been turned on its head as we live longer and housing prices skyrocket.
Now many of us approaching retirement face either poverty at home or a new life abroad to escape the shackles of Australia's rising cost of living.
It works for many, but shipping off all our retirees to Bali is not the final answer.
Something needs to be done at home.
The Committee for Economic Development Australia has called for an overhaul of retirement policy, including the introduction of pre-tax mortgage repayments and making superannuation available for owner-occupied home purchases.
Its Addressing Entrenched Disadvantage in Australia report in April found the overall poverty rate of older Australians had blown out to three times the OECD average.
"Without a significant policy overhaul, that number is likely to significantly rise over the next 40 years," CEDA chief Professor Stephen Martin said.
Prof Martin said one option was to make the family home part of the assets test for the age pension and to change superannuation payments to an after-income tax payment, with all other super tax concessions removed.
"Alternatively, mortgage payments on the family home could be allowed to be made pre-tax," he said.
"Implementing one of these options would allow for two important components of retirement savings - superannuation and the family home - to be treated the same."
Allowing first home-buyers to access superannuation funds to purchase their first owner-occupied housing could also help, Prof Martin said.
Sell Up, Pack Up and Take Off authors Stephen Wyatt and Colleen Ryan agreed reverse mortgages and early access to superannuation funds for home-buying were good ideas, if implemented correctly, to fix the mounting problems for retirees at home.
"Everyone is scared of taking on a reverse mortgage in case the bank turns bad and throws them out of the house," Mr Wyatt said.
"If the government could bring in legislation to make it watertight, it would become much more attractive.
"Otherwise, things are looking pretty bad for retirees.
"They're looking at changing the tax laws around superannuation benefits, which have been very lenient to retirees.
"The demographic story is compelling - the number of people over 65 is going to triple in Australia in the next 30 years.
"The pressures on government are dramatic and the capacity to look after the aged is diminishing."