For those who are planning to retire before 2056, their future looks dim as fewer people expect to own their homes.

In a think piece in Architecture & Design, Grattan Institute’s Brendan Coates and Tony Chen said the retirement income system is at risk of failing for those who rent.

Coates and Chen discovered that homeowners are twice as likely to be in financial distress than homeowners. These can be seen in skipping meals and failing to pay bills.

In addition to the lower incomes, they believe renters may struggle to overcome the deposit hurdle. This leads to a decrease in homeownership rates for the young and poor.

A Grattan Institute study found that only 45% Australians between the ages of 25 and 34 own their home. This is in comparison to 60% in 1981 and only 45% in 2016. The homeownership rate for Aussies aged between 35-44 years has fallen from 75% to 62%.

Chen and Coates believe that today’s homeownership is more dependent upon income than in the past. The homeownership rate of those 25-34 was 63% to 23% while rates for the lowest 20% fell to 23%.

Grattan Institute’s model allows us to project that homeownership rates in the 65-year-old age group would decline from 76% and 74% in 2026, to 70% in 2036, to 64% to 2030 and 57%-2056 to 57%.

“And while we don’t project homeownership rates for different income groups due to data limitations, it is more than likely that less than half of low-income retirees will own their homes in future, down from more than 70% today,” they said.

Retirementists are likely to rent more frequently, which could result in financial stress. Chen and Coates said that Australia must increase rent assistance policies for low-income renters to enable them to afford a home.

Grattan Institute’s Money in Retirement Report recommended that Commonwealth Rent Assistance is increased by 40% in order for it to regain its purchasing power from fifteen years ago.

They stated that regulators and policymakers should examine retirement incomes. The average worker can expect to retire in retirement with a minimum of 89% income. Renters will not have enough income to cover their daily living expenses.

It is possible that a retired couple who owns a home may not feel it as idyllic. Chen and Coates predicted that homeowners will continue to be responsible for their mortgages after retirement. Only 42% of Australians 55-64 own their home, compared with 72%.

“And rising housing costs will eventually force retirees to take down more value of their home to fund their retirement,” they said.

They agreed that the recent expansion by the government of the Pension Loans Scheme was a great move to allow retired people to borrow against the value of their home, but feel that there is still more to be done.

“The future is changing for retirement in the coming years. Most retirees will not be poor. Many retirees will be more capable and able to support themselves than ever before. They won’t, however, as they are becoming more vulnerable. They will be the ones that need our help,” they said.