Kept In The Manor To Which She Is Accustomed
Sydney Morning Herald
Friday February 2, 2007
A PROPERTY boom and an ageing population have combined to create a unique Sydney social category. Economic modelling has revealed a big group of older, single women living in the city who have considerable wealth but a low standard of living. You could call them Sydney's asset-rich, cash-poor widows.
Analysis by Simon Kelly at the University of Canberra's National Centre for Social and Economic Modelling found Sydney women aged 65 to 69 who lived alone in 2004 had average net wealth of $561,000. By comparison, single women in the same age group living elsewhere in NSW had average net wealth of just $191,000.Housing is by far the biggest source of wealth for Sydney's widows. Most owned a home outright before the property boom between 1996 and 2003 which more than doubled the city's house prices. As a result, the typical single Sydney woman aged 65 to 69 had $482,000 in housing assets but only $79,000 in other investments, such as shares.But if Sydney's widows have grown rich on paper, many live poor. Dr Kelly found Sydney women aged 65 to 69 received an average income of about $12,000 from all sources. It was much the same story for single women aged over 75. Their assets were lower, about $380,000, but their average income was also $12,000, in line with the single aged pension.That's well short of the $18,192 which the Westpac-Association of Superannuation Funds of Australia Retirement Living Standard says a lone retiree needs for a "modest" lifestyle in Sydney, and it's a third of what's needed for a "comfortable" retirement.Living in a large house just makes things worse because maintenance costs eat up a lot of disposable income."Often these women are living in big, old houses in inner suburbs and the rates and maintenance costs can be quite high," Dr Kelly says. "Not only is that asset not providing them with any income, or supplementing their pension, but it's also costing them quiet a lot to live there."So why don't more of Sydney's widows down-shift to smaller houses and free up some cash to fund a better lifestyle?Dr Kelly, who has been investigating the social and economic implications of Australia's ageing population, thinks it's a generational thing. The current crop of women over 65 are content to live frugally so they can pass on their riches when they die."Many older women now seem to be happy to have a low standard of living so they can hand on their very expansive house to their children," Dr Kelly says.But we are on the cusp of a cultural shift. The leading edge of the baby-boomer generation will graduate into the 65-plus age group in four years and they'll probably take a very different approach. They won't be content to live in a house worth half a million dollars, or more, while sitting by the radiator eating baked beans on toast and listening to the radio. Boomers are used to luxuries and will be much more willing than their predecessors to liquidate assets so they can keep buying them. It will be increasingly easy for boomer women to do this because of the growing number of financial products targeting older people. One example is the reverse mortgage, a loan category that is already growing rapidly. A reverse mortgage allows a home owner to borrow cash against the value of their home. The loan, plus interest, can be repaid with proceeds from the eventual sale of the property.Another factor that will encourage boomer women to switch out of housing assets is the paltry superannuation payouts most are due to collect. A separate study by Dr Kelly shows half of all women in the boomer generation - this year aged 46 to 61 - have just $8000 or less saved in superannuation. The average female boomer has only $35,000 in super. The surge in house prices has done much more for the retirement lifestyles of most single Sydney female baby boomers than superannuation.
© 2007 Sydney Morning Herald
