Future Focus: How much do you need for retirement if you don’t own a home?
Retiring Without a Home: How Much Do You Really Need?
The "Australian Dream" has long been defined by owning a home outright by the time you retire. In fact, our entire retirement system—from the Age Pension assets test to the Association of Superannuation Funds of Australia (ASFA) benchmarks—is built on this assumption.
But as housing affordability reaches crisis levels in Adelaide and across Australia, more people will enter retirement as renters. It is a significant challenge, but it is not impossible to be financially successful without property.
The Hidden Cost of Renting
If you don't own your home, your required retirement income rises substantially—often by more than 40%. While a homeowner only needs to fund lifestyle and maintenance, a renter must also fund the landlord every single month for 30+ years.
For a "comfortable" lifestyle, a renting couple might need an additional $700,000 in super compared to a homeowning couple. That’s a large gap to bridge.
Redefining Success
Success doesn't have to look like a quarter-acre block. For some, financial independence means:
Liquidity: You can sell shares or ETFs in minutes to fund a life event. You can't sell a kitchen to go on a holiday.
Flexibility: Renters can downsize, upsize, or move to different cities with ease as their needs change.
Diversification: Instead of all your wealth being tied up in one Adelaide property, you can have a global portfolio of thousands of companies.
The Path Forward
If property isn't in your plan, you must use the tax system to your advantage elsewhere. Superannuation is your best friend. In the pension phase, your investment earnings and withdrawals are tax-free. By maximising your contributions early, you can build a "rent-funding" portfolio that provides the security you would otherwise get from homeownership.
At Humble Goode, we help renters build a robust strategy that accounts for rising rents, ensuring that "asset-rich but cash-poor" never describes your retirement.
If you are interested in learning more, give us a call on 08 7477 8252. Our Adelaide based advice team can help you create a long-term portfolio, to generate both growth and income for your future.
General Advice Warning:The information on this website is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making an investment decision in relation to a financial product.