Association of Superannuation Funds of Australia (ASFA) chief executive Martin Fahy says retirees renting in Sydney require around $1,045,000 and $1,166,000 at retirement for single and couples respectively, about double the amount their home-owning counterparts need.
“This compares to $545,000 for a single and $640,000 for a couple who own their own home,” Mr Fahy said.
“For a single person renting privately in Sydney, around $320,000 is needed to support even a modest standard of living in retirement, with a couple needing around $450,000 to support a modest budget.”
The projections were based on the estimates that a one-bedroom apartment for singles and a two-bedroom unit for couples would cost $62,434 and $79,801 annually.
Home owners in comparison require only $43,300 for singles and $59,600 for couples.
However, even those figures could leave some retirees under significant strain if their circumstances change.
“All estimates assume people are enjoying reasonable health, so any serious illness or disability makes the situation even more challenging, as does rental instability and associated costs,” Mr Fahy said.
Given these projections, many Australians may find themselves unprepared at retirement to support themselves.
“Compulsory superannuation contributions at 9.5 per cent fall well short of what is needed to support a comfortable standard of living in retirement for anyone renting privately,” Mr Fahy said.
Around three in four household heads aged over 65 own their home outright, while 8 per cent are paying off a mortgage and 8 per cent are privately renting, according to ASFA.
Ongoing property affordability concerns in Sydney are hitting retirees too, with just 65 per cent ownership among residents by the age of 60, compared to 80 per cent across the rest of Australia.