Retiring without a home: planning for the growing cohort of lifelong renters

Australia's retirement system is built, largely unspoken, around one big assumption: that retirees own their home outright. The Age Pension rate — the Age Pension being the means-tested government payment administered by Services Australia — is set on that basis; the family home is the central tax- and pension-exempt asset; and home equity is the implicit fallback for aged care, late-life costs, and a bequest. But a growing and often-overlooked cohort of retirees do not own a home — they rent, and will continue to rent throughout retirement. This includes lifelong renters who never bought, people who lost the home through divorce, business failure, or hardship, and those who sold and didn't re-buy. For this group the financial position in retirement is materially different and generally harder: they must fund rent for life out of their retirement income — a large, ongoing, inflation-exposed cost that homeowners simply don't face; they have no home equity to draw on for emergencies, aged care, or to leave behind; and they face genuine housing insecurity in old age. The system offers some offsets — a higher non-homeowner assets threshold for the Age Pension, Commonwealth Rent Assistance, and the Age Pension itself as an income floor — but these rarely fully bridge the gap. As home ownership rates among those approaching retirement have declined over recent decades, planning well for the non-homeowner retirement is increasingly important, and distinct.

How large is the growing non-homeowner cohort?

This is a real demographic shift. Home ownership rates among Australians approaching retirement have been declining over recent decades, so more people are reaching retirement without owning. The paths into a renting retirement are varied: lifelong renters who never managed to buy; people who lost the home through a divorce settlement or a business failure; those who sold (perhaps in a downturn, or to fund something) and didn't re-buy; and those simply priced out of ownership over their working lives. Whatever the path, the result is the same — a retirement funded while paying rent, in a system that mostly assumes the opposite. And it is an overlooked cohort: much retirement planning, and much policy, implicitly assumes a paid-off home, leaving the renter retiree's distinct needs comparatively neglected.

How does the system's home-ownership bias play out?

That bias shapes everything for this group. The Age Pension rate is calibrated on the assumption that the retiree owns their home and so faces no rent or mortgage — which means the same pension that is adequate for a homeowner is tighter for a renter who must pay rent out of it. The family home is the central exempt asset, excluded from the assets test and shielded by the main residence Capital Gains Tax exemption, and renters have no equivalent wealth-sheltering asset. And home equity is the implicit fallback for aged care (funding a refundable accommodation deposit), late-life costs, and a bequest, which renters lack entirely. The cumulative effect is that the retiree renter is running the same race as the homeowner but carrying a weight the homeowner doesn't: an ongoing housing cost, no sheltered asset, and no equity fallback.

What is the core challenge of funding rent for life?

Unlike a homeowner, who having paid off the mortgage faces only rates and maintenance, a renter must fund rent every fortnight for the rest of their life, and rents rise over time. This means a renter generally needs a larger retirement income or savings buffer than a homeowner with the same lifestyle, just to cover the housing cost. The rent is largely un-hedged against inflation and market rises — a structural risk the renter carries. And longevity amplifies the problem: the longer the renter lives, the more total rent they must fund, so longevity risk bites harder for renters than for homeowners whose housing is already secured. Funding lifelong rent is the central financial fact of the renter retirement, and it must be built explicitly into the income and savings plan.

What offsets does the system actually provide?

There are genuine offsets, though they rarely cover the whole gap. First, non-homeowners have a higher Age Pension assets test threshold than homeowners, recognising they don't own a home — by $267,000 across every situation, following the 1 July 2026 indexation. A single non-homeowner can hold up to $600,000 in assessable assets and still receive the full pension (against $333,000 for a homeowner), and their part pension only cuts out at $1,000,500 (against $733,500); for a couple the non-homeowner full-pension threshold is $766,000 and the cut-off $1,369,500. Second, pensioners who pay rent above a threshold receive Commonwealth Rent Assistance, an additional payment of 75 cents for every dollar of rent above the minimum, up to a maximum of $219.40 a fortnight for a single person and $206.80 a fortnight for a couple combined (2026 figures). Third, the Age Pension itself — guaranteed and indexed for life — provides an income floor that is especially central for renters, who lack the home-equity safety net. These are valuable supports, but even combined they generally don't fully offset the cost and insecurity of lifelong renting, which is why retiree renters tend to face higher housing costs and more housing stress than homeowner retirees.

What does housing insecurity actually look like for renters?

The non-financial dimension is significant. Rising rents can outpace the indexation of the pension and Rent Assistance, squeezing the renter's budget over time. Lease instability means renters face the risk of leases ending, forced moves, and the stress and cost of relocating in old age, when moving is hardest. Older renters — and single older women in particular — are a widely recognised at-risk group for housing insecurity. The insecurity is not merely financial; the lack of a secure place to live is a fundamental stressor in old age, and it weighs on wellbeing as much as on the budget.

What housing options can improve security?

Improving security is an important part of planning. Community or social housing, where the retiree is eligible, offers more affordable and secure tenure, though waiting lists are typically long. Land-lease communities (where the resident owns the dwelling but leases the land, paying site fees) offer a lower entry cost than buying, and Rent Assistance may apply to the site fees (a topic covered elsewhere). Rental retirement villages provide security and services within their own cost structures. Emerging affordable-housing and build-to-rent options, and co-housing or shared arrangements (which also reduce isolation), are further possibilities. Where it is achievable, planning toward more secure tenure — rather than an open-market rental subject to rises and lease-end risk — materially improves both the financial stability and the wellbeing of the renter retiree.

What are the planning implications, especially for aged care?

Planning for a renter differs from planning for a homeowner. Factor lifelong rent into the income need (a larger buffer is generally required); maximise the Age Pension and Rent Assistance entitlements; budget for rising rent over the decades; and manage drawdown carefully, since the savings buffer is the only safety net when there is no home to fall back on, while making use of the higher non-homeowner assets threshold. On aged care, the renter can't fund a refundable accommodation deposit from a home, so accommodation costs must come from savings. But the means assessment works differently for someone with no home, and this is where a renter's position can actually be simpler. Services Australia conducts an aged care means assessment that determines whether a resident qualifies for "low means" status, and that status determines whether the government helps with their accommodation costs. A renter with modest savings and no home value in the assets test may well be assessed as a low-means resident, with the government paying some or all of the accommodation cost. So the lack of a home doesn't bar access to care; it changes how the care is funded and assessed. Throughout, the wellbeing dimension deserves attention alongside the numbers — housing security is fundamental in old age, and the renter retiree's challenge is emotional as well as financial.

Worked examples

These two cases show planning for the renter retirement. They are illustrative only and not personal advice.

Susan, 66, is single and has rented all her life. She has $250,000 in super and is about to claim the Age Pension, and she is anxious about funding rent for the rest of her life on a fixed income. On these facts, Susan needs renter-specific planning. As a non-homeowner her $250,000 sits well under the single non-homeowner full-pension threshold of $600,000 (following the 1 July 2026 indexation), so she is likely to receive close to the full Age Pension, and as a renter she also qualifies for Commonwealth Rent Assistance of up to $219.40 a fortnight on top. But she must still fund rent for life from her pension plus a drawdown of her $250,000, with rent rising over time. On these facts it is generally rational to maximise her Age Pension and Rent Assistance, budget realistically for rising rent, manage the drawdown of her $250,000 carefully as her only buffer (there is no home fallback), and explore more secure, affordable tenure — community housing if eligible (despite waitlists), a land-lease community, or a stable long-term rental — to reduce the insecurity. Her position is harder than a homeowner's, but with maximised entitlements, careful budgeting, and a push toward secure tenure, it can be managed.

Bill, 70, lost his home in a divorce settlement and now rents. He has $400,000 in super and a part Age Pension, and is starting to think about aged care, worried he has "no house to pay for it". On these facts, Bill's worry is understandable but partly misplaced. As a non-homeowner he can't fund a refundable accommodation deposit from a home, but the aged care means assessment determines whether he qualifies for low-means status, and with no home value counted and modest savings he may well be assessed as a low-means resident, with the government paying some or all of his accommodation cost. On these facts it is generally rational to reassure Bill that not owning a home doesn't bar him from aged care, plan his aged care funding from his savings within that framework, and in the meantime maximise his Age Pension and Rent Assistance, budget for rising rent, manage his $400,000 as his buffer (using the higher non-homeowner threshold, well under the single cut-off of $1,000,500), and consider more secure housing options. His renter status shapes the aged care funding path but doesn't close it off — and understanding that eases a real source of his anxiety.

For the growing cohort of Australians retiring without owning a home, the planning challenge is real, distinct, and too often overlooked. The work is to recognise the distinct and generally harder position (the system assumes home ownership, and renters need tailored planning), factor lifelong rent into the income need, maximise the Age Pension and Commonwealth Rent Assistance entitlements, budget for rising rent over the long term, manage drawdown carefully given the absence of a home fallback while using the higher non-homeowner assets threshold, explore secure and affordable housing options to reduce insecurity, plan aged care funding without home equity (recognising the different and sometimes more favourable low-means assessment for non-homeowners), and address the security and wellbeing dimension, not just the numbers. The renter retiree carries a weight the homeowner doesn't — an ongoing, rising, un-hedged housing cost, no sheltered asset, and no equity fallback — and the system's offsets soften but rarely erase that burden. As home ownership declines among those approaching retirement, more people will face this reality, and serving them well means setting aside the homeowner assumptions baked into most retirement planning and building a plan around the distinct facts of a life lived, and to be lived, in rented housing.

Sources

• Services Australia — Assets test for Age Pension
• Services Australia — How much Rent Assistance you can get
• Australian Government Department of Health — Means assessment for residential aged care