More than 350,000 Australian pensioners’ hip pockets are expected to be hit once Aged Pension asset test changes come into effect on January 1, 2017.
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.
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 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 to free up assets 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.”