Be prepared: Pensioners hip pockets may feel the pinch

Over 55s finance expert and author Rachel Lane explains, with more than 350,000 Australian pensioners’ hip pockets expected to be hit once Aged Pension asset test changes come into effect on January 1 2017, its vital seniors review their income and asset mix to maximise their finances for the years ahead.

With home ownership long viewed as an investment for the future, for some pensioners, downsizing the family home could be a crucial factor to free up much needed funds and retain financial independence.

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 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,” Ms Lane said.

“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.

“Downsizing frees up assets and maximises finances and by being fully aware of these options, outside of the Aged Pension, over 55s may find themselves better off.

“Land lease communities that cater to over 55s offer a variety of benefits, such as no stamp duty fees, entry or exit fees, which contributes to more money in pensioners’ pockets.”

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.

“It’s important people are aware of their financial standing as the changes are implemented and options available to maximise their finances,” Ms Fisher said.

“People need to look at more options to maximise their lifestyle, like those who look to downsize and relocate to an over 55s lifestyle community often pay less for their new home, which provides them with more capital to fund their senior years.

“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, with a third living in poverty, with home ownership one of the biggest factors that contributed to financial wellbeing.

“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.

“Many lifestyle community residents are also able to access rental assistance, another added comfort each fortnight.

“It’s vitally important to seek independent financial advice to ensure the right decision is made for the individual and couple’s circumstances.”

Ingenia Lifestyle Lara residents, Andrew and Chris have lived in the community for the past 18 months and are already enjoying the benefits of a more manageable home, which has been thoughtfully designed for the couple to age in place yet remain independent.

“Before we moved I guess we were sort of in a rut without realising and needed a change. We also thought community living would be nice and about time we downsized,” Andrew said.

“We didn’t realise what a great opportunity it would be. It is really good to downsize, clear everything out and you feel like you no longer have this great weight on your shoulders.”