Your Biggest Retirement Asset Isn't Your Super. Are You Protecting It?
Here is a warning from The Grattan Institute 2025 report - Renting in Retirement report: Why Rent Assistance Needs to Rise.
"Most retirees who rent, live in poverty, including more than three and four single women, and this problem is set to get worse… few Australians who rent are saving enough to cover the cost of renting in retirement. As a result, today’s low income renters are likely to become tomorrow struggling renters in retirement…’ - Grattan Institute.
Read in this article
- The Grattan Report's Warning: How to Escape the Retirement Rental Trap
- The Harsh Reality of Renting in Retirement
- Taking Control Now: Protecting Your Future and Your Family's
- Time to Move Beyond Just Thinking About Today
- The Safety Net: Insurance as Dignity
- Frequently Asked Questions: Homeownership & Retirement Poverty
- Why is renting in retirement such a major issue now?
- I'm building my super; won't that be enough to cover my rent?
- How exactly does disability insurance help me secure a home?
- What is the point of an 'immediate inheritance' if my kids are adults?
- Why are single women so much more vulnerable to this crisis?
The Grattan Report's Warning: How to Escape the Retirement Rental Trap
A recent, sobering report from the Grattan Institute (February 2025 report, 'Renting in Retirement: Why Rent Assistance Needs to Rise') has cast a harsh light on a growing problem for Australian retirees: the immense financial hardship faced by those who rent in their later years. The study reveals a stark reality - that's difficult to write about and stay silent about:
- 'Most retirees who rent are living in poverty'.
This isn't a future problem; it's happening now, and the trend is getting worse.
For many, our dream of a comfortable retirement is intrinsically linked to owning their own home. The Age Pension, while a cornerstone of our social security system, was designed with the assumption of homeownership. For those without this crucial asset, the numbers simply don't add up.
Facts: the share of over 65 who own their own home is projected to fall from 76% today, to 70% by 2036, and 57% by 2056.
The Harsh Reality of Renting in Retirement
The Grattan Institute's findings, as highlighted in a recent article, are alarming: Most retirees who rent are living in poverty. Poverty is the norm: A staggering three in four single women who rent in retirement are living in poverty.
Rent assistance is not enough: The Commonwealth Rent Assistance, designed to help, is woefully inadequate. After receiving the maximum assistance, a single age pensioner is left with as little as $300 per week. With the median one-bedroom apartment in a capital city costing around $350 per week, retirees are immediately on the back foot, struggling to cover housing costs, let alone food, utilities, and healthcare.
Vulnerable groups are hit hardest: The report specifically notes that women who separate from their partners later in life are "particularly vulnerable," with less than half managing to purchase another home within ten years. This pushes a significant number towards a retirement of financial instability.
High housing costs for retirees without the means to pay means more homelessness, with research showing "high rents have a greater impact on homelessness then illicit drug use or history of being in state care” .. Grattan.
The trend of declining homeownership is set to exacerbate the issue. The report projects the share of over 65s who own their home will fall from 76% today to just 57% by 2056. This means a future where a much larger portion of our population will face the financial stress of renting in retirement, a situation for which few are adequately prepared.
Taking Control Now: Protecting Your Future and Your Family's
While these statistics are daunting, they underscore the critical importance of proactive financial planning. The goal should not just be to accumulate a retirement nest egg, but to secure the single most important asset for a stable retirement: a home.
So, what can we do now to safeguard against this future?
1. Secure Your Ability to Purchase Your Home
Your ability to earn an income is your greatest asset. It's what pays the mortgage and builds your future. But what if a sudden illness or injury left you permanently unable to work? This is where a total & permanent disability insurance policy becomes one of the most important financial backup tools you can have.
Should the unexpected happen, the right disability policy can provide a lump sum payment to help you manage the change in life this will inevitably bring - including paying out an existing mortgage, buying a home to live in or meet medical costs, no matter what happens to your ability to continue to earn an income. It removes the single biggest financial burden and guarantees you and your family have a place to live, providing peace of mind and protecting your path to a debt-free retirement.
2. Create an Immediate Inheritance for Your Children
The cycle of renting can be generational. If we face challenges securing a home, it's likely our children will too. One of the most powerful strategies we can implement is to ensure our children have a financial head start, breaking the cycle of rental dependency.
A life insurance policy is more than just a safety net; it's a tool for creating an immediate inheritance. Upon your passing, the benefit paid to your children can be a transformative amount of capital. This isn't about leaving a legacy decades from now; it's about providing a direct and substantial financial boost that can be used for a home deposit, allowing them to secure their own property and begin building wealth early. By doing so, you are not only securing their future but also mitigating the risk that they will face the same rental struggles in their own retirement.
The Grattan Institute's study is a disturbing wake-up call and stark reminder to get your personal insurances sorted. Beyond a grudge purchase, a disability insurance policy is the backup plan we all need today, before we become wealthy over time with hard work and opportunity.
The financial security of your retirement years and your children's future is inextricably linked to property ownership.
Time to Move Beyond Just Thinking About Today
So, what's your backup plan? Putting disability insurance in place to protect your income, and using a life insurance strategy for the next generation, is the most effective way to defend your family against the poverty trap of renting in retirement.
Key Findings of the 'Renting in Retirement: Why Rent Assistance Needs to Rise' report.
- High Poverty Rates: Approximately two-thirds of retirees who rent in the private market are living in poverty.
- Falling Home Ownership: Home ownership rates have declined for lower-income Australians in the 45-54 age bracket, increasing the likelihood of renting in retirement.
- Gender Disparity: Single women are particularly vulnerable, with more than three-quarters of single retired women who rent living in poverty.
- Inadequate Savings: Many older Australians who rent lack sufficient financial wealth to cover their rent during retirement.
- Rising Homelessness Risk: The combination of high rents, inadequate savings, and insufficient Rent Assistance places a growing number of older Australians at risk of homelessness. "high housing costs for retirees without the means to pay has a greater impact on homelessness than illicit drug use or a history of being in state care" - Grattan
The Safety Net: Insurance as Dignity
So where does Life and Disability Insurance fit into 'Stay Rich' not just 'Getting Rich' planning?
It is about poverty prevention. The Grattan Institute clearly suggests that renting in retirement is a leading driver of poverty. Renters face chronic, low-level anxiety about stability.
- Disability Insurance ensures that if the human capital machine (you) breaks down, you don't lose the asset base (the home).
- Life Insurance (which can now pay out up to 24 months prior to death for terminal illness) provides the liquidity for dignity.
It ensures you can pay out the mortgage, fund medical interventions, or make lifestyle changes. It guarantees that the final chapter is written in a home you own, not one you rent.
Its time to start living differently.
Frequently Asked Questions: Homeownership & Retirement Poverty
Why is renting in retirement such a major issue now?
For generations, the Australian retirement system—including the Age Pension—was built on the assumption that most people would own their homes by the time they retired. As the 2025 Grattan Institute report shows, this assumption is crumbling. Falling homeownership among lower-income earners means more people are destined to be lifelong renters, facing a collision between rising rents and a system not designed to support them.
I'm building my super; won't that be enough to cover my rent?
For the vast majority, the answer is no. Superannuation is designed to cover living costs, not the ever-increasing cost of private market rent. A paid-off home is a massive non-cash asset that removes your single largest expense. Without it, your super has to work much harder and is often depleted far too quickly, leaving you exposed to severe poverty in your later years.
How exactly does disability insurance help me secure a home?
Your income is the engine that pays the mortgage. If a serious illness or injury permanently takes that away, your ability to keep your home (or buy one) is shattered. A Total & Permanent Disability (TPD) policy pays a lump sum that can be used to pay off an existing mortgage or provide a deposit for a home, effectively securing your most critical retirement asset regardless of your health.
What is the point of an 'immediate inheritance' if my kids are adults?
The goal is to break the generational cycle of rental dependency. With property prices rising, getting into the market is tougher than ever. An "immediate inheritance" via a life insurance payout gives your children a powerful head start when they need it most. That capital can be the difference between them securing a home early or facing the same rental poverty trap in their own retirement.
Why are single women so much more vulnerable to this crisis?
The Grattan Institute report is clear: more than three-quarters of single retired women who rent are living in poverty. This is driven by a combination of lower lifetime earnings, smaller superannuation balances, and time out of the workforce. Women who separate from partners later in life are hit hardest, with less than half managing to re-enter homeownership, pushing them toward long-term financial instability.
Call us today on 1300 137 403 or email us here for a no-obligation private chat about your situation.
Drew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses. He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn. Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.
