With home ownership long viewed as an investment for the future, for some over 55s, downsizing the family home could be a crucial factor in freeing up much needed funds and retaining financial independence.
A recent report – Adequacy of the Age Pension in Australia, commissioned by the Benevolent Society and Per Capita, highlighted just how dire it is for some pensioners out there, now with a third living in poverty.
The report also found home ownership is one of the biggest factors contributing to financial wellbeing, perhaps most significantly, whether or not they own their own home.
As we prepare for interest rates to drop and more than 350,000 Australians to be affected by next years Aged Pension asset test changes, it’s vital for seniors to review their income and asset mix to maximise their finances for the years ahead.
Over 55s finance expert and author, Rachel Lane, said now was an opportune time for seniors to re-evaluate their finances and think about what lifestyle changes could better prepare them for the future.
“It’s incredibly important for seniors to understand what financial impact the pension changes will have, based on their means.
Those with assets above the new thresholds are likely to see their pension reduced – and those whose assets exceed the new cut off limit will lose their pension entirely.
“Secondly, those who opt to live on the interest generated from their savings to fund their health, wellbeing and lifestyle in retirement, may be impacted as interest rates drop,” Rachel said.
Ingenia Chief Operating Officer, Nikki Fisher, said it was incredibly important for over 55s to understand the potential impact these changes could have to limit financial stress long term and look at options to keep themselves financially fit.
“Home ownership is a goal, not just for today’s youth. Lifestyle-focused land lease communities are one of the newest senior living trends available to the downsizing market, allowing residents to own a home but lease the land offering a more affordable entry price point with no stamp duty or complicated exit fees
which provides them with more capital to fund their senior years.”