Being 50 and up in Australia today An investigation into the Cost of Living Pressures for the Over-50 s in Australia

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1 Being 50 and up in Australia today An investigation into the Cost of Living Pressures for the Over-50 s in Australia September 2015 Message from Christopher Zinn The cost of living is a potent phrase much used, and abused, by the media, by politicians and by ourselves usually in reference to its inexorable upwards spiral. It is also measured by various techniques to analyse prices, such as our Consumer Price Index, all of which are subject to speculation and economic policy. In this campaign we ve sought to take the cost of living away from the pundits and politicians and give it to the people. We ve challenged the authority of the statistician, who can crunch so many numbers for a living in remote offices and listened to the grass roots view from those who face these costs in real life. We wanted to give a real voice to all those who cry out in despair whenever they see others claim cost of living pressures are somehow easing off. About 20,000 members of the FiftyUp club heeded the call to share their time, their budgets and their concerns about work and income, super and retirement and finance and taxes. They identified by a country mile the bill which caused the most pain, ironically it is private health insurance, and also ranked the strain caused by other essential services. They also provided a rich tapestry of comments, ideas and even policies numbering in the thousands which along with the survey results we shall take to Canberra and present to decision-makers. A big thanks to senior producer of the FiftyUp Club Jackie Levett for so much of the work and also to all of those who took the time to ensure their feelings about cost of living pressures are heard. I salute you.

2 About the FiftyUp Club The FiftyUp Club is a consumer network advocating for Australians aged 50 and over nation-wide. Well-respected consumer advocate Christopher Zinn is the spokesperson for the club. The Club also uses the combined buying power of more than 130,000 members to work with providers of essential household goods and services to unlock improved value for its members. The Fair Go for FiftyUps campaign The Fair Go for FiftyUps campaign was launched to gauge the national mood around how older Australians are affected by rising costs and which government policies can help. 19,866 Australians have joined the campaign, with 56% of respondents from NSW and 28% from QLD followed by VIC (11%) and smaller numbers in ACT, NT, WA, SA, and TAS. How many over 50s are in Australia today? State/Territory Total ACT 1% NSW 56% NT 0% QLD 28% SA 1% TAS 0% VIC 11% WA 2% Grand Total 100% According to the last ABS Census in 2011, 1 in 3 of the 21 million Australians were over the age of 50. In 2015, the population has grown to 23.7 million, meaning there are roughly 8 million over 50s in Australia today. Survey reliability Source: ABS 2011 Census data The survey was taken of the existing pool of 130,000 members of the FiftyUp Club. The level of statistical reliability is dependant upon the sample size and the size of the population. The confidence level of this sample size was set at 99% with a Population Size of 8 million over 50s in Australia. The required sample size for a random survey would be just 664 people. This campaign questioned 20,000 people and exceeded the test for statistical validity. 1 ABS (2011) 2011 Census, QuickStatshttp:// quickstat/0 2 ABS (2015) Australia experiences lowest population growth in almost a decade ?opendocument&tabname=Summary&prodno=3101.0&issue=Mar%202015&num=&view= 3 National Statistical Service (2015), Sample Size Calculator Sample+size+calculator

3 Work and income Older Australians are dependant on the aged pension, or will be. Three out of four respondents (75%) were either on a full or part-pension or expected to draw on one in the future. Equally, 75% think the pension is not adequate/not quite enough or totally inadequate and a joke. Only 24% responded that On a pension or expect to draw on a pension the pension was adequate to meet their retirement needs and just 1% said it was more than adequate. No I don t extpect to draw a pension, 9.62% No I m self-funded retiree, 14.17% Yes I m on a full pension, 15.55% Other, 1.98% Yes I m on a Yes I expect to draw a full pension in future, 21.76% Yes I expect to draw a part-time pension in future, 18.99% The children have moved out. The over 50 s are mostly free from children living at home with 76% not having any children living with them. 14% have one child living at home, 8% have 2 children living at home, 2% with 3 children and 1% with four or more. Most do not need to care for grandchildren or parents. 72% of respondents did not need to provide financial assistance or care to grandchildren or parents, with only 1 in 10 spending 5 12 hours a week caring for family members. Older Australians are notably content with their part-pension, 17.93% employment status. 61% responded that they are happy with their employment and it s about right for this time in their life. Although 65% have never been discriminated against at work due to their age, almost 1 in 5 have experienced this behaviour. The FiftyUp Club still considers this ratio too high. Many older Australians would like to continue contributing to the workforce after they reach the age of 65. Two out of three respondents would continue working after 65 for one of the following; lower income tax rates; more part-time opportunities; jobs specifically designed for older workers; or the opportunity to mentor younger workers.

4 Superannuation and retirement incomes With superannuation not being compulsory in their day, most over 50 s have not saved enough for retirement. Only 15% have saved enough superannuation and think they will be comfortable in retirement. The majority responded that superannuation was not compulsory in their day and they haven t saved enough (47%), another 11% said that they hadn t saved enough but they hoped to win lotto and 27% responded that they didn t know and it was hard to predict the More than $2m, $1.5-$2m, unexpected expenses they might face. How much superannuation will/have over 50s retired on? 0.89% 1.42% Less than $100,000, 33.32% $100,000-$300,000, 29.69% Almost 2 out of 3 Australians have or will retire on $300,000 or less. Only 6.2% of older Australians had over $1 million dollars in the kitty for their retirement, however this doesn t take into account other assets and pensions that could add to retirement income. $600,000- $999,999, 29.69% $300,000-$600,000, 18.90% $1-$1.5m, 4.74% Two out of three over 50 s have their superannuation in a industry superannuation fund (40%) or a retail super fund (25%). 1 in 6 over 50s have their super in a self-managed super fund and the same number don t have any superannuation at all. Almost half (45%) think tax concessions for people with large super balances should be wound back, however 34% disagree wit this and another 1 in 5 don t know. The low interest rate environment has been a disaster for half of older Australians with half getting lower interest on their savings. Those without a mortgage and not relying on interest (26%) found the low interest rate environment had no impact on them while 1 in 5 thought it was great because it lowered repayments on their mortgage (21%). Older Australians understand the complexity of high property prices in the major cities and the shortage of supply in the market, and their responses reflect this. They responded; There should be no intervention and we should let the market determine prices (29%); Governments should increase supply to put downward pressure on prices (23%); Negative gearing should be scaled back or abandoned (18%); Governments should give more grants for first-home buyers (12%); Encourage them to keep growing, it s good news for owners (8%); and My generation needs to share the windfall with our children (5%)

5 Household bills causing strain More than 1 in 2 respondents nationwide have had some trouble paying their bills including those who have found themselves in serious financial hardship. Current level of bill stress High I usually have trouble paying my bills, 10.02% Of concern given the growing medical needs as the population ages, almost 1 in 3 Australians over 50 are finding Health Insurance the hardest bill to pay (29%). Not far behind, the essential utility bill, the power bill, is putting strain on older Australians with 1 in 4 finding the electricity bill the hardest bill to pay (22%). Other bills putting pressure on older Australians include council rates (13%), home insurance (8%) and car insurance (5%). None I pay every bill on time easily. 41,52% Mild I sometimes have trouble paying my bills, 45.72% At a time when older Australians are trying to save for retirement, 1 in 3 Australians have had to dip into their savings in order the keep up with their bills. Internet Water Petrol Gas Groceries Mortgage Car Insurance Home Insurance Rates Other Electricity Health Insurance 0.44% 1.25% 1.43% 2.08% 2.57% 4.47% 4.61% 8.13% 12.60% 11.41% 21.67% 29.25% 0% 10% 20% 30%

6 Health insurance and health care When it comes to health insurance 51% have stated they are not prepared to go without it but really can t afford it, while 23% said it s affordable when you make a few compromises. They equally blame the government (21%), doctors and surgeons (21%) and health funds (20%) for the increase in the health insurance bill. In reforming the health insurance industry, the over 50 s would like the government to offer bigger rebates once you re a policyholder for 20 years (31%) and would like health insurance companies to offer more flexible plans and coverage options. Older Australians need appropriate health cover as they start to suffer from chronic diseases. Two thirds of older Australians have one or more of the 8 most common chronic diseases (which include arthritis, asthma, back problems, cancer, chronic obstructive pulmonary disease, cardiovascular disease, diabetes or mental health conditions). Better continuity of care between different doctors and health services is the best way to improve the treatment of chronic diseases according to 44% of respondents.

7 Finances and taxes To secure the financial situation of older Australians, it is important that the family home remain exempt from the pension assets test (42%) and another 15% would like to see no changes to the taxation of superannuation. Older Australians still need to be convinced when it comes to changing the GST. Their responses indicate various different opinions when asked Do you support any change to the GST?; No, absolutely, not (46%) Yes, we should increase the rate above 10% (17%) Yes, we should broaden the base to include more items that are currently exempt (17%) Yes we should broaden the base AND increase the rate (12%) Don t know (7%) Politics There is one thing that older Australians almost all agree on, 87% believe that politicians do not understand cost of living because they are out of touch. However, if politicians want their vote, they are going to have to take older Australians views on cost of living pressures into account. Another 85% said that cost of living was either important or very important to their vote at the next election. They have spent their life working hard and 38% have stated they do not accept that over 50s have to make sacrifices to help balance federal and state budgets while another 40% don t know. Politicians understanding of cost of living Total No they are out of touch 86.37% Yes they understand, but there s not much they can do about it 5.71% Don t know 2.24% Other 2.04% Yes I have faith in the Government/Politicians and their ability to control cost of living 1.48% Grand Total 100%