Retirement wealth gap widens as renting retirees struggle to keep up

Record numbers of Australians are entering retirement as renters, exposing a growing divide between those who own their home and those who don’t — a gap that continues to widen as housing costs rise.

For decades, retirement in Australia has been built around a simple assumption: by the time you stop working, you own your home. That assumption is now breaking down — and the consequences are becoming harder to ignore.

Over the past 20 years, the number of retirees renting privately has doubled. In 2003, around 6 per cent of retirees were renters. By 2023, that figure had climbed to 12 per cent, according to data from the Household, Income and Labour Dynamics in Australia Survey (HILDA) — and the trend shows no signs of slowing.

As more Australians enter retirement without housing security, a growing divide is emerging between those who own their home and those who don’t. The data tells one story. But as many readers have made clear, lived experience adds important nuance — revealing just how complex and deeply felt this issue has become.

A two-speed retirement system

Australia’s retirement framework — superannuation, the Age Pension, and concessions — was designed around widespread home ownership. Homeowners typically enter retirement with lower living costs, stronger financial buffers, and far greater certainty.

Renters, on the other hand, face a very different reality.

HILDA data shows that retirees who rent generally have much lower superannuation balances than homeowners. Recent retirees who rent hold, on average, significantly less in super than those who own their home outright or still carry a mortgage. At the same time, they face ongoing rental costs that homeowners simply do not.

In practical terms, this means renters must draw down their savings faster just to cover housing — often the single largest expense in retirement.

The compounding effect of rent

For retirees living in private rentals, annual rent costs now average well over $18,000 a year. That figure has risen sharply in recent years as vacancy rates tighten and rents surge across much of Australia.

Unlike mortgages, rent payments don’t reduce over time. There is no point at which the cost disappears. For retirees on fixed or modest incomes, this creates ongoing financial pressure — and significant stress.

Housing insecurity also brings other costs: frequent moves, upfront payments, removal expenses, and the emotional toll of uncertainty. Many older renters report having to relocate multiple times later in life, often with little notice.

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Why renters are more exposed to poverty

The link between renting in retirement and financial hardship is stark. Advocacy groups such as the Council on the Ageing (COTA) have consistently highlighted that retirees who rent are far more likely to experience poverty than those who own their homes — particularly single retirees and older women.

This isn’t simply about lifestyle differences. It reflects structural settings within the system.

Under current rules, the family home is exempt from the Age Pension assets test, regardless of its value. This means a retiree living in a multi-million-dollar home may qualify for a full or part pension, while a renter with modest savings must exhaust those savings to cover rent before receiving equivalent support.

The result is a system where housing wealth is protected, but housing costs are not.

Fewer pathways to ownership later in life

For some retirees, downsizing or buying into retirement living communities can restore housing security. In recent years, some older Australians have used superannuation to purchase modest units or villas — often in retirement lifestyle community villages.

For those able to do so, the shift from renting to owning — even later in life — can dramatically reduce stress and improve retirement confidence. But this option isn’t available to everyone, particularly those with lower super balances or disrupted work histories.

Divorce, caregiving responsibilities, health issues, and periods out of the workforce all increase the likelihood of entering retirement without housing security — challenges that disproportionately affect women.

A trend set to worsen

Looking ahead, the outlook is concerning. Younger generations have lower home ownership rates than previous cohorts, and many expect they will need significantly more savings to retire comfortably than today’s retirees.

If current trends continue, projections suggest that nearly one in four new retirees could be renting within the next two decades. At the same time, rising property values allow existing homeowners to leverage equity, invest further, and pass wealth to the next generation — reinforcing the divide.

This isn’t just a housing issue. It’s a long-term retirement policy challenge.

What readers are telling us – Why this issue divides opinion

This issue doesn’t just show up in data — it shows up in lived experience. When this topic was previously covered, it sparked strong and sometimes emotional responses from readers. Their reactions highlight just how complex, personal, and deeply felt the housing conversation has become in later life.

Reader reactions: “It’s complicated — and people feel strongly”

The discussion under this topic struck a nerve, and the comments reveal just how differently Australians experience retirement — even when they’re the same age.

A common theme was frustration with the way the issue is framed. Many homeowners felt it was unfair to imply that owning a home automatically makes someone “richer” in real life. Several readers pointed out that rising property values are often “on paper” unless you sell, and that home ownership comes with ongoing costs that renters don’t face — including council rates, insurance, maintenance, repairs, and in some cases body corporate fees or remaining mortgage payments. For these readers, home ownership is primarily about security, not luxury.

At the same time, there was strong recognition that renting in retirement can be brutally unstable. Even some commenters who defended homeowners acknowledged that rent rises, short leases, and forced moves can create anxiety — particularly for older Australians on fixed incomes. The emotional undertone here wasn’t just about money; it was about certainty, dignity, and the fear of being moved on late in life.

Another major theme was the belief that the problem is being driven by big, system-wide pressures rather than individual choices alone. Many readers argued that housing affordability is primarily a supply-and-demand issue — pointing to population growth, immigration levels, construction constraints (labour shortages, red tape, rising build costs), and policy settings that affect rental supply. This group tended to see the solution as structural: more housing supply, better planning, and stronger long-term policy rather than short-term assistance.

However, a large portion of commenters also emphasised personal trade-offs. Many described the sacrifices they made to buy a home — fewer holidays, older cars, tight budgets — and expressed concern that increasing government support could end up meaning higher taxes for people who already “did the hard yards.” Several readers also raised the idea that some renters may have had higher spending earlier in life, choosing experiences over mortgage repayments, and are now feeling the consequences. Importantly, even within this view, there was an acknowledgement that not everyone rents by choice — divorce, caregiving, illness, and life disruption can derail the path to ownership.

A final thread running through the comments was deep mistrust of government and strong views on what policy should look like. Some argued for increasing rental assistance and reforming pension settings. Others pushed back hard, calling instead for smaller government, deregulation, less debt, and reduced immigration — with a belief that government intervention often creates unintended consequences.

The takeaway

What the responses make clear is that Australians don’t just disagree on solutions — they disagree on the story behind the problem. Many renters want stability and fairness. Many homeowners want recognition of what it took to get there — and reassurance they won’t be punished for it.

In reality, both can be true: renting in retirement is increasingly risky, and home ownership also comes with real costs and decades of sacrifice. The challenge is finding policies that reduce housing stress for older renters without turning it into an “us vs them” debate — because most people, on both sides, are simply trying to feel secure in later life.

Looking ahead

What this debate ultimately highlights is not a simple divide between renters and homeowners, but a shared desire for stability, fairness, and dignity in later life. Most Australians — regardless of how they live — have made compromises, absorbed setbacks, and done the best they could with the circumstances they faced.

As the population ages and housing pressures continue, the challenge for policymakers is to reduce insecurity without fuelling resentment, and to acknowledge both the real vulnerability of renting in retirement and the genuine costs and sacrifices of home ownership. Because for most people, retirement isn’t about wealth — it’s about certainty. And ensuring that certainty is increasingly one of the defining issues of ageing in Australia.