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Only 11% would sell home to fund retirement

More than 8 in 10 Australians are unwilling or unsure to use the family home to fund their retirement, despite the average home owner holding around $442,000 of equity in their property, new research has found.

According to the MLC Wealth Sentiment Survey for the third quarter of 2016, just half of Australians surveyed said they believed they had done enough to achieve their wealth goals. The two reasons people gave for not having done enough included ‘not earning enough money’ and ‘self doubt’ (50 per cent and 32 per cent, respectively).

On average, respondents estimated that $818,000 was needed in savings and investments to retire comfortably, but it was found that the average person expected to retire with only $557,000, a shortfall of $261,000.

However, the super and investments company revealed that “if we include home equity in our savings, most of us will have more than enough at retirement”.

The survey found that 30 per cent of people own their homes outright and 29 per cent owned it with a mortgage, but that just 11 per cent would sell their house at retirement, with even fewer (7 per cent) saying they would use their house as equity at retirement.

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It suggested that should people sell their family home, they would create a net surplus of $180,000 (notwithstanding any future capital appreciation) at retirement.

The report reads: “[W]hile a majority of Australians report a significant shortfall between their anticipated financial needs at retirement and their expected savings and investments, most do not factor their primary residence in calculating their wealth.

“If Australians included the family home in their wealth, most would have enough once they left the workforce.”

Lara Bourguignon, NAB general manager - corporate super, commented: “The research highlights an important connection between planning and confidence in reaching financial goals.

“With so few people having a financial plan, we perhaps shouldn’t be surprised that Australians doubt themselves and don’t believe they have done enough to reach their wealth goals. Having a financial plan is crucial to feeling empowered and getting where you want to go with your money.”

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[Related: House prices tipped to fall up to 25% in Sydney and Melbourne]

 

Only 11% would sell home to fund retirement
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Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

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