Australia’s skyrocketing house prices mean home ownership is next to impossible for anyone under the age of 35, according to new research led by the University of New South Wales.

Yet the retirement system is entirely based on the assumption that people own a home outright by the time they stop working, said Hal Pawson, a housing professor at the University of NSW.

“So the pension is set at a level that is relatively low compared to most other countries, but the assumption in Australia is that we are a home ownership society and that was feasible as … we have been at 80 per cent of home ownership rates in retirement historically for decades,” he told news.com.au.

“But it has stated to tail off with home ownership of lower age groups falling much faster for a long time in the last 20 to 30 years.”

Research from the Grattan Institute showed that the home ownership rates for over 65s is going to fall from around 78 per cent to around 60 per cent over the next 30 years, he added.

RELATED: Why super balances are suddenly soaring

This means a huge cost could be looming for the federal government as a result of dropping ownership, he warned.

“If this projected falling home ownership rate for older people eventuates … then that will probably produce a lot of political pressure for a significantly higher pension,” he said.

There was also the issue of a growing number of people going into retirement with a mortgage they still have to pay off, he said.

People will then dip into their super pot to pay off the mortgage and it will qualify them for the pension, adding more pressure on the government purse, he explained.

Magic retirement figure

The commonly cited figure that a million dollars is needed for retirement can unnecessarily scare people, and the reality is most Australians will not need that much to be comfortable, according Christina Hobbs, who is the co-founder a super fund created for women called Verve Super.

How much you will need in retirement depends on the lifestyle you want to live and factors like if you’re still paying rent or paying off a mortgage, if you’re living as a couple or a single person, the types of holidays you like to go on, what you do for entertainment and whether you are still financing dependants, she explained.

“The best thing to do is to sit down and come up with a rough estimate of what you think you’d like to spend each year, you can then play with some of the superannuation tools available to help you work out how you may be tracking,” she told news.com.au.

“The Association of Superannuation Funds of Australia’s Retirement Standard estimates that a single person will require around $28,254 a year and a couple $40,829 a year to live a modest lifestyle, assuming they’ve paid off their own home, but for some it could be hundreds of thousands of dollars more.”

RELATED: How you could make an extra $100k

The amount you need to retire is such a personal thing, agreed AMP advisor Di Charman, who said that people need to take into account that retirement isn’t just about the “fun stuff” like holidays, but they should also consider care and medical costs.

“It reiterates that financial wellbeing is so important because it connects to everything else so when trying to find the right number and find what lifestyle you want to retire in, you might be surprised that it might be more moderate than you think and it could be the other way, it might be a bit more outlandish but you can peel back from that,” she said.

Most of all she recommends people engage with their super from a young age – so pick up those statements and get engaged with how your money is being invested, she added.

Meanwhile, the Australian Super Fund Association recommends that for a comfortable retirement, single people will need $545,000 in retirement savings and couples will need $640,000, while Treasury advises that if you can maintain 65 to 75 per cent of your pre-retirement income after tax that you should be OK in retirement.

But there’s a major catch with both of these recommendations – it’s based on the assumption that people own a home and will retire at 65, a prospect increasingly unlikely for the younger generation.

Women retiring with less super

On average, Australian women retire with 47 per cent less superannuation than men, according to AMP research.

The huge issue in Australia is there is no retirement benefit paid for workers who are out of the workforce and caring for others – including new parents, those looking after children with a disability and carers of the elderly, according to Ms Hobbs.

“In Australia, this work is typically undertaken by women and so women often retire with less super,” she said.

“In Australia we also have very low rates of workforce participation by women with children – this means that women are often not returning to the workforce after they have children or returning at significantly reduced hours.

“Compared to other wealthy countries Australia has expensive childcare and our parental leave policies don’t support men to take time out as carers when children are young. The pay gap that exists in Australia in every industry and at every level of employment also adds to the super gap.”

AMP’s research showed that women are more worried about retirement and feel less prepared than men.

In fact, 54 per cent of women expect a modest or difficult retirement, compared with 46 per cent of men.

Meanwhile, 39 per cent are worried about their ability to cope with unexpected expenses, compared with 30 per cent of men.

Investing based on gender equality

Verve Super has just announced it will begin allocating its members’ superannuation investments partly based on how Australian companies perform on gender equality measures.

This new investment approach will likely see hundreds of millions of dollars shifted away from Australian companies performing poorly on gender equality over the coming years towards those with better practices, according to the fund.

“Our members know all too well that money equals power, and they don’t want their own super savings invested in companies that are failing women. It’s not good enough to keep supporting the status quo – where there are more Andrews in CEO positions in the ASX 200 than women,” she said.

“With so much frustration about the glacial progress on gender equality at a political level, we’re giving Australians the opportunity to use their collective superannuation power to put pressure on corporates to be better employers for women.”

For Verve’s new policy, companies will be assessed on five criteria including their gender pay parity, anti sexual harassment policies, commitment to flexible work practices, promotion of women into leadership and paid parental leave.

It will also be influenced by data collected by the Workplace Gender Equality Agency.

Its research found that 96 per cent of their 4500 members considered it important they invest in companies creating a good workplace for women.

Major rule dumped

Changes to super rules announced in the federal budget were expected to benefit women in particular.

Previously, Australians earning less than $450 a month from a single employer weren’t entitled to earn super on this money, but it will be abolished from July 1, 2022.

The Retirement Income Review found that dumping this rule would improve retirement outcomes for women, low-income earners and those doing part-time work.

Xavier O’Halloran, director of Super Consumers Australia, told Choice the rule was outdated and removing it will make Australia’s retirement system fairer.

“Scrapping this rule will see about 200,000 women and 100,000 men on low incomes earn a combined $90 million in extra super a year,” he says.

“It’s an important change that will make the superannuation system fairer.”

Women typically have a broken working life due to having children and are also in lower-paid industries, which means on average women retire with about half the super that men do, said Ms Charman.

Dropping the $450 threshold was “brilliant” and that no matter what women earn it means they will have “skin in the game” when it comes to super, she added.