Hi Tammy, we are really struggling on the age pension. We have a small cash reserve and our family home. How do we survive? Thanks, Tim & Shell. Warriewood.
Hi Tim and Shell, It is almost impossible to make ends meet on the age pension. You do, however, have significant wealth in your home.
Downsizing your family home can be very overwhelming. You may have strong emotional ties to the home, it may represent independence, or be earmarked as an inheritance. However, I would challenge you to consider – what is more important to you, where you live or how you live?
Personally, I would opt for a modest home, less financial stress, and more cashflow to live, travel and spend quality time with family.
An online search of Northern Beaches property for sale, sorted from least expensive, provides a range of lower cost housing options. Retirement villages can be a great option for the savvy retiree wanting a fabulous lifestyle and are often freshly renovated.
If you do plan to downsize, consider doing it earlier. It is physically easier, and you can enjoy the benefits sooner. Some retirement villages retain a percentage of your entry cost, hence the longer you live there, the more cost effective it can be.
If you do not wish to downsize, you can still access the equity in your home. There are a range of ways to do this, including the Federal Government’s Home Equity Access Scheme. However, these arrangements and the costs involved should be considered very carefully! Independent advice is essential.
Whichever way you access equity from your home, it may have an impact on your age pension entitlement, which should be considered when assessing your options.
Quick Tips: The terms of retirement village contracts vary widely and
should be reviewed carefully with your solicitor. Be cautious when buying a
retirement village or over 55’s development ‘off the plan’. Instead, look at sales of comparable older properties.
You can make Personal Super Contributions up to age 75, even if retired (caps apply). Downsizer Super Contributions can be made from age 55, but must be made within 90 days of settlement (eligibility criteria apply). If you lose the age pension, you may be eligible for the Commonwealth Seniors Health Card.
Any questions, please speak with your financial adviser, or call me on 8376 0350.
Regards, Tammy
Tammy Marshman and Up Wealth Sydney Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd, AFSL number 230323, an Australian Financial Services Licensee.
This is general information only, as in preparing it we did not take into account your personal objectives, financial situation or needs. Before acting on this information, you should consider whether it is appropriate for your personal circumstances. Although the information is considered reliable, we do not guarantee that it is accurate or complete and you should not rely upon it. Please seek financial advice specific to your situation before making any financial, investment or insurance decision.