Potential retirement poverty: a serious issue

Australia has a pretty substantial problem, and it’s one that has two components. On one hand, our population of elderly people continues to climb without any sign of slowing, according to Korda Mentha, and on the other, many face the risk of poverty.

Dealing with this issue is something that’s going to involve aged care providers, industry bodies with a willingness to educate and government departments.

Potential poverty

The Committee for Economic Development of Australia (CEDA), recently a released a report, The super challenge of retirement income policy. In it, the organisation outlined the economic impacts of an ageing Australian population along with decreasing housing affordability.

It’s easy to see where this is going. Many Australians over the age of 65 could soon be living under the poverty line.

Stephen Martin, chief executive of CEDA, explained that while Australia currently has a well-regarded retirement income system, the ageing population and housing affordability could prove a real challenge.

“The structure and policies in place now may not be robust enough to ensure Australians can retire comfortably in the future and are likely to put unsustainable fiscal pressure on the Federal Budget,” he said.

“However, a lack of housing affordability now is likely to mean that over the next 40 years more people will retire without owning their home and an increasing number of retirees are likely to be at the mercy of the private rental market.”

Without any action, many elderly Australians could find themselves struggling to make ends meet, and placing further strain on the resources of aged care providers and public support systems. So what can be done?

Australians living below the poverty line could place strain on aged care.

Tackling the issue – before it develops

CEDA explained that reviewing taxation arrangements on superannuation and owner-occupied home mortgages is a good place to start. What’s more, the organisation noted that superannuation funds should be able to be placed into owner-occupied housing.

“What we need is a frank, bipartisan review of our country’s expectations for our retirement system and the changes necessary to ensure it can continue to live up to those expectations for future generations, Mr Martin explained.

The Australian Council of Social Services found that in 2012, there were 2.5 million Australians living in poverty, an increase from survey of two years prior. Action now is essential to avoiding a potentially serious aged care poverty issue.

With a laundry list of challenges that aren’t soon going to go away without effective action from the industry, it’s important to providers to think about every avenue of financial support. Reach out to Mirus today to learn more.