Research reveals retired renters ‘going without’

With all the talk about housing affordability in the media at the moment, there appears to be one group of older Australians left out – retirees who rent.

While we’ve heard plenty about first home buyers, millennials and retirees who want to downsize, not a lot has been said about pensioners who rent their homes.

But research released in the Retirement Affordability Index has revealed just how hard retirees who live in rental accommodation are doing it, and if you rent, chances are you might be able to relate to their plight.

The affordability index splits retirees into six different categories – comparing couples and singles who own their homes, rent, have private income or rely on the age pension.

The research has found that couples and singles on the age pension who rent are doing it tougher than any of the others, and are facing the biggest increase in costs of any older Australian.

A couple on the age pension who rent are described as “cash strapped” by the research, relying on less than $27,000 a year in pension income but facing an annual expenditure of more than $34,000.

They spend just 4% of their income in health, which the research says could be an indicator that they’re missing out on “important preventative measures” because of financial hardship.

However, it was found that a couple on the age pension in a rental property spend more of their income on alcohol and tobacco (6%) than other groups of older Australians.

And while a couple on the age pension who live in a rental property are doing it tough, those on their own are doing it even harder.

According to the affordability index, a single person on the age pension will earn less than $18,000 per year but have an annual expenditure of nearly $19,000.

They will spend on average 29% of their income on rent, compared to 22% of income spent by couples who rent and just 8 to 15% for retirees who own their own home.

The research found that it was unlikely a pensioner living on their own could afford to rent in a city or inner city suburb, meaning many may have been forced to relocate to the outskirts or rural areas.

The average pensioner living on their own spends just 6% of their income on medical care and health services and only 7% of their income on recreation – less than half of what their peers spend.

Matt Grudnoff from The Australia Institute said retirees who rent were forced to make tougher decisions about their spending.

“Retired renters spend on average almost 30 per cent of their income on housing, while retired owners only spend about 10 per cent,” he said.

“Spending three times as much on housing means that retired renters have to cut back in other areas.

“The two biggest areas are recreation and transport (which includes maintaining a car). The average retired homeowner spends $200 a week on recreation and transport while the average retired renter spends only $80 per week.”

He believes that because they’re spending less on recreation and transport, retired renters are at greater risk of isolation and are more likely to be stuck at home.

And the high cost of renting could also be affecting the health of pensioners.

Grudnoff says the data shows retired renters are cutting back on healthcare spending.

“While the average retired homeowner spends $55 a week on healthcare, the average retired renter spends less than half that at $25 per week,” he said.

“It is very concerning if retired renters are unable to afford medication or are putting off seeing health professionals because they have to expend almost a third of their income on housing.”

What sets retired renters apart from their homeowner peers is the increasing costs of rent. So, while homeowners over-60 are facing living costs generally in line with CPI of 2.5%, the research found that renters were being hit with rents soaring above CPI.

The data in the Retirement Affordability Index backs statistics from the Housing for Aged Action Group, which show that 80% of their client spend more than 30% of their income on rent.

20% of HAAG clients spend more than 70% of their income on rent.

HAAG co-manager Fiona York told Starts at 60 last mont that a number of older people were struggling to afford private rentals and it was putting them on the edge of homelessness.

“Their major problem is that they have become part of the growing number of Australians who have not attained home ownership due to things such as low wages, illness, family changes etc,” she said.

“Affordable rental housing is in increasingly short supply, is insecure and may not be able to be adapted as people’s needs change. Compounding this  there has been less and less expenditure on public housing. ”

Tell us, are you a renter who is struggling to make ends meet? Do you think the research data is accurate?