Ingenia

Seeking financial certainty in retirement? Here’s how

Savvy retirees are discovering that Ingenia’s land-lease model provides peace of mind, flexibility and cashflow benefits. 

Many Australians strive for home ownership during their working lives, but hanging on to your hard-won property in retirement might not always make the best sense financially.

“Staying put simply doesn’t add up for a lot of people,” says Rachel Lane, finance expert and author of Downsizing Made Simple.

“If you’re an empty-nester, chances are you’re no longer utilising all the space in your home – but you’re still paying for that space through insurance premiums, utilities and council rates.”

And then there’s maintenance. “Retirees typically aren’t living in brand-new homes, which means maintenance expenses are a lot higher than they are in newly built homes,” notes Lane.

“If you enjoy cleaning out the gutters, mowing the lawns and painting the weatherboards, then more power to you. But most people don’t enjoy that. They are exhausted by all the maintenance – or they have the additional expense of paying someone to do it for them.”

Life expectancy also comes into play. Australians are living longer and remaining active well into retirement, making our golden years potentially more expensive.

A reverse mortgage is one way to free up capital to fund an extended retirement. But tapping into your home’s equity this way poses problems of its own: you’re paying interest on the money you borrow, eroding your capital at a time in your life when you should be free to spend it or conserve it for the kids.

Current world events should also be considered. Many retirees saw their superannuation balances shrink when COVID-19 struck, and the long-term trajectory of the Australian housing market is uncertain.

DCM Research conducted a survey in July 2020 and found that of the more than 2,200 participants (all aged between 60 and 85), 43 percent of respondents felt an increased sense of vulnerability as a result of the COVID-19 crisis.

With all this in mind, Lane reckons downsizing makes the most sense for many Australians on the cusp of retirement.

“It frees up equity and gives you options,” she says.  And, because it’s your principal residence, you won’t pay capital gains tax on the sale.

However, successful downsizing isn’t just about moving to a smaller, less expensive home: it’s also about “right-sizing” to a house that is low-maintenance, safe, secure, supports independence and provides ongoing financial benefits.

The Ingenia Lifestyle model fulfils these criteria. It’s a unique proposition: customers purchase a new, state-of-the-art house and lease, rather than own, the land it sits on. This offers a much more affordable entry price-point and eliminates the need to pay stamp duty – leaving you with more in the bank.

The rent covers rates; community maintenance and gardening, and security. Because they are renting, many residents are also eligible for government rental assistance.

According to Ingenia Lifestyle’s most recent annual survey, more than two-thirds of Ingenia residents feel financially comfortable, suggesting these communities provide excellent value as well as peace of mind.

And, if you decide it’s time to move on, there are no exit fees or deferred management charges, which means you keep 100 percent of any capital gains growth.

“Retirement communities can be really complicated, but Ingenia’s model is very simple,” says Lane.

She notes that each retiree’s situation is different and urges older Australians to crunch the numbers before making any decisions. But she believes Ingenia’s proposition is too attractive to overlook.

“There are plenty of models out there that are far more complicated, and the difference can add up to not just tens of thousands of dollars, but hundreds of thousands of dollars,” she says.

 


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