AUSTRALIA- Declining home ownership rates mean that superannuation will become the biggest investment vehicle for up to 25% of Australian in 15-25 years' time, according to a white paper by REST Industry Super.
"Historically, home ownership rates in Australia have been very high - around 80% by retirement age," said REST Industry Super CEO Damian Hill. "However the home ownership rate for those under 35 is less than half this and is in serious decline. In the last financial year alone, the number of first home buyers in Australia declined from 190,000 to just 90,000.
"The problem with this is that so much financial advice and policy has been developed around the assumption that people will own their home when they retire. While home ownership has long been one of the key pillars of Australia's retirement income policy, it is certainly showing signs of crumbling."
Currently, 15% of Australian retirees do not own their own home. In the next five to 15 years there will be closer to 20% of individuals retiring without owning their own homes, while in 15-25 years' time this is likely to have risen to about 25%, according to the REST paper. Furthermore, at the moment, an average of 78% of retirement savings are made up of house and other property assets.
If the predicted trends run true in future, superannuation funds will become even more critical as a post-retirement savings vehicle. REST recommends a variety of action across stakeholder groups, with individuals paying more attention to superannuation savings and voluntary contributions over their working life, the government re-examining the adequacy of retirement incomes, and superannuation funds continuing to educate members about making the most of their savings.
The A$19bn (US$20.4bn) REST is Australia's largest industry superannuation fund by membership, with 1.9 million members.
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