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NewsSome home truths about the housing decisions older Australians can make
Some home truths about the housing decisions older Australians can make

Some home truths about the housing decisions older Australians can make

It is a paradox which has the policy makers in a spin. Most older Australians have no intention in dipping into the equity in their own home even if it leads to a more comfortable retirement.

Almost ¾ of those aged 65 and over own their residence without a mortgage and, despite being asset rich and income poor, are largely uninterested in using their ‘castle’ to fund their retirement costs.

When asked if they would dip into what for many has been a massively appreciating asset 38% said ‘not under any circumstances’ and 40% only for health/medical and aged care.

Some of the headlines around the research, done by the government’s Productivity Commission into the Housing Decisions of Older Australians,  has focused on  issues such  the family home in the pension assets test.

And while both sides of politics say they have no intention to make such a move there’s no doubt various think tanks believe it is time for a change-- especially with an election year looming.

In the meantime it’s well worth considering  the Productivity Commission’s findings to arm yourself with some information to make better decisions  for yourself and hopefully stop politicians making idiotic ones on our behalf.

The report states the obvious that housing has the dual role as a place to live, with 83% expressing a strong preference to stay put, and as source of wealth now valued collectively at $1 trillion.

It says there’s an aligned interest  between such older Australian and the government. It’s much cheaper for the government to provide in home care ( 800,000 now get it) than fund residential age care which is fast becoming  an end of life care service ie only for 2-3 years stay.

Only one per cent have a preference to live in a aged care facility, two per cent in a mobile home park and just six per cent in a retirement village.

Staying in the family home is certainly the overwhelming choice  but it comes at a cost.

The irony, as the Productivity Commission sees it,  is that many older and particularly less wealthy Australians continue saving even though they face higher health and aged care costs.

They are more likely to cut their spending than draw down on their wealth, such as the family home,  which the commission sees as a untapped source of retirement income.

The explanation given in the report is a strong aversion to any debt in old age  and what’s called ‘precautionary saving’ driven by uncertainty around the costs of living longer and health and care needs.

There are financial equity release products, such as reverse mortgages, on the market but the report says the market is small and despite the potential is unlikely to grow in the short term.

While the number of renters in older age is between 15-20% they are says the report a significant and vulnerable minority more likely to experience housing stress and insecure tenure and inadequate government support.

We are going to hear a lot more about the housing decisions of older Australians how some 15% of pensioners, if they sold their homes, would have no need of the pension.

Such a move might save the government $6 billion a year but what might it cost the pensioner?

Originally posted on .

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Someone
Someone from TAS commented:

There appears to be no appreciation on the part of pundits of the social aspects of the elderlies' preferences for remaining in the homes in which many have travelled the road of lìfe and from which they have accrued community connections. 

Marie
Marie from VIC commented:

I find it interesting that politicians who make all the decisions for us are the ones who are still feeding in the trough of our tax money, of which we are still paying a hefty whack. 

Francesca
Francesca from NSW commented:

Let the older Australians make their own decision regarding the family home. Its an invasion of freedom to impose the sell of the home so that the government does not have to pay pension. There is money wasted on climate change issues and related espenses paid to third world countries. 

Taryn
Taryn from VIC commented:

Taryn from Vic I agree, Why in the goodness would one move and be worse off. Let the Politicians clean up the mess,they caused.I am not hearing them down sizing or giving up all their freebees,all on the tax payer!! I worked hard to own my home,without a cent from the Government to help me!!! 

Ross
Ross from NSW commented:

Sirs, The useless Government placed the country in massive debt, and now talk of wanting Pensioners to get out of there homes, or possibly including the homes in the asset test, (which would wipe out all pensions) to pay for their incompetence. Let the politician's get out of their homes and cut back on their free-bee's to help pay for the debt they caused. Regards, Ross from N.S.W. 

margaret
margaret from NSW commented:

Yes, true. We are looking at downsizing and it would be much easier if we didn't have to pay the hefty stamp duty fee. If we all sold our homes, it would cost more all up than staying put. 

Jill
Jill from VIC commented:

It is a myth in our area that downsizing would release capital as many of the houses on large blocks are bought up by overseas investors or developers who build multiple dwellings and sell each one for the price they paid for the whole block. We would probably pay the same or more to live in a smaller townhouse in our area and we would not want to leave the area as we have no relatives in Australia and have a friendly and supportive community and all facilities close by here. We love our house and large garden and would not move under any circumstances as gardening and our large vegie garden keeps us active and occupied and eating healthy food. I have already written to my Federal MP telling him the plan is a vote changer for me and all my retired friends. We worked hard and sacrificed a lot to pay off our house and save for our retirement and are furious that the Government is trying to socially engineer us into feeling guilt and sacrificing the enjoyment of our remaining years for the sake of other groups in society. It is a dangerous precedent to suggest our needs and enjoyment are less important than others and could result in us being treated with less respect in society. 

Cecilia
Cecilia from NSW commented:

I think s Pensioners are really badly done by. I have no Superannuation as it did not exist for women when I was working. My husband and I worked very hard all our lives, I also looking after my elderly mother - not being aware that I was entitled to a Carer's Pension or Allowance. We paid tax all our lives and are afraid of what will happen to us in the future. We created a resort-like place, which now we have great problems to uphold. We are both over 80, my husband who is officially my carer, recently broke his neck. The future does not look good. Particularly with the specialists and medication costs going up and up. We have no children in Australia, which would make it easier to give us a hand. We also do not want to give up our home and go into retirement village. My husband did make some enquiries though - just in case, but we were told to be better off to stay where we are because I have a lot of health issues and my specialists all live close by. Instead of relaxing in our old age, we just worry, with the mere pension we just eke out a living.Shame on you, Government, it's us who made Australia what it is now through hard work. Cecilia from Cabramatta commented 

Gilbert
Gilbert from QLD commented:

I will have to consider taking out a Reverse Mortgage/Equity Loan on my house once my Allocated Pension money runs out. One needs additional money to the aged pension to maintain an acceptable standard of living, able to continue with Private Health, Regos., Insurance, etc especially when I am my wife's career. As I age, I may need assistance with that care also. Gil, Queensland 

David
David from QLD commented:

Well folks, every morning I wake up and think ,"what have they going to do today to unaustralianise Australia ?". The trend seems to be to make older Aussies feel guilty about breathing our air. Let's just put them all on an island and drop supplies so we can just forget about them so we can have their houses,money,cars,etc. Unlike many bludgers on the planet today most of the relics have worked long and hard for what they have. Now the think tank want them to live in some shit box so some yuppie can move in and reno the old palace. Could you imagine any of the wankers who mismanage the country now would react if they were asked to do that ? When the much maligned Boomers were fifteen years old, the expected thing was to work for fifty years and retire on a pension. No super needed as the government was supposed to be using part of the taxes to put aside for that retirement. Now, the formerly respected older generations are blockages in the drain, and just another bump in the road for the increasingly disrespectful governments and more junior generations to drive over. I think the so called rulers of this once great nation should start looking after those who need help rather than waste time and money on the illegals, the system rorters, cowards who roam our streets at night looking for an easy score, and crooked pollies to mention a few. Am I over the top ?, maybe yes, maybe no. What will we wake up to tomorrow? Dave. 

Lyn
Lyn from NSW replied to David:

You are right David, part of our taxes was supposed to be put aside for pensions as there was no pension or superannuation scheme back then other than for Govt Employees who had their contributions paid by the Govt into their superannuation scheme, for which other seniors will be penalized on 1/1/17 due to the huge sum needed to pay current pensions from that Govt Superannuation scheme and I mean the Govt employees in ordinary jobs, not politicians. Those Govt contributions could only have come from taxes collected from all employees in the workforce in our day but there are some who think that taxes now are not for paying pensions to those who contributed to those past taxes which funded the Govt Super scheme back then before Super was formally introduced for all. They wouldn't dare to reduce a Govt employee' s pension yet it seems to be OK to reduce a state pension to the rest of us who helped pay for theirs. That could be grounds for discriminatory behaviour perhaps. 

David
David from QLD replied to Lyn:

Thanks for your reply Lyn. Not much we can do, pollies are the same the world over. Full of hot air and greed. I don't know if our opinions mean anything but venting is good for the soul. Never know, a good pollie may turn up one day but I'm not holding my breath. Dave. 

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