Two very important research
- The number of homeowners heading into retirement that still have a mortgage has tripled since 1996 to 45 per cent. (economist Saul Eslake) using census data and broader ABS housing data to build figures to be used by the Australian Institute of Superannuation Trustees
- The portion of Australians who believe their savings will not carry them through retirement is now the majority. (Recep Peker, head of research at Investment Trends
What will this group do on entering retirement?
“They are likely to apply at least some of their accumulated superannuation to discharge the debt” (once you are over 65 you can spend your superannuation money — it is no longer preserved.)
In turn this creates a new problem: wealth in superannuation accounts will be lower than forecast. If this group does not use superannuation in this way, they will be leveraged at a very late stage in their lives.
∴Either the government will have to make direct cuts to pensions or it will have to trim access further. The stalling of indexation of payments may not be enough to deal with these looming changes.