Security in retirement: the impact of housing and key critical life events

Abstract

The proportion of aged persons in Australia is set to increase significantly, posing many challenges. Amongst these is the growing number of households who lack housing security in retirement. The Age Pension in Australia is set at a comparatively low rate compared to other developed countries, reflecting an historical period when home ownership rates were high. A decline in home ownership and the residualisation of the social housing sector, and the consequential increase in the proportion of low-income households in poorly regulated private rental housing however have meant the social insurance role of secure housing is not available to an increasing number of aged Australians. In this paper we examine tenure, wealth, gender, educational attainment and relationship status over time of recently retired Australians and those at midlife to identify key factors that influence households’ accumulation of wealth and thus their security in retirement. Using cross-sectional data from the Australian Bureau of Statistic’s Survey of Income and Housing, longitudinal data from the Household, Income Labour Dynamics Australia survey, and qualitative interviews with divorcees we find that gender, educational attainment, changes in relationship status and housing market conditions have a significant impact on wealth accumulation and tenure. Our findings indicate that social change, and adverse ‘critical life events’ (Stone et al 2015) have significant impacts on households by and at midlife, and beyond. Of particular concern is that the housing market itself is a key source of wealth accumulation and dispossession. A very marked outcome is that to be private renter at 45 years of age is likely to mean being a renter and highly impoverished, in retirement. The number and proportion of older, lone person households has increased dramatically albeit that men and women tend to have different trajectories into poverty.