Over 65s in Australia own over $1 trillion worth of housing, a huge amount of wealth by anyone's standing. Many retirees are asset rich, yet in the same breath, are unable to live a decent quality of life due to minimal cash flow.
Unfortunately, the polices of our political parties discourage older Australian's from unlocking the equity in their property and using against supporting their lifestyle. The owner occupied property that pensioners reside in does not contribute to the pension asset test. However, if a pensioner was to downsize their home through a sale to unlock their equity they are penalised for doing so in the form of receiving a reduced pension. This is particularly difficult for when the time comes that such members of society are unable to care for themselves, and have to foot their own bill for retirement care.
This is also the case if pensioners resort to entering into a reverse mortgage, of which is also subject to interest rates that are typically higher than that of a residential mortgage. In summary, there is no incentive for pensioners to convert their bricks and mortar assets into cash due to the taxman standing by to take the government's share.
Pensioners would be able to improve their quality of life if such financial disincentives were removed when selling the family home, however some key items making the decision to sell up difficult include:
Asset means test
So how is the government planning on softening the impact on our generation of older Australians? In short, NOTHING! Pensions are set to take a hit in 2017 with a number of changes to take place which will hurt a significant amount of pensioners, with some to lose such source of income all together. This will be carried out through changes to be applied to the aged pension asset test.
Such measures confirm that the government has no intention of relenting their attack on older Australians that have struggled over decades in the aim of passing on their assets to loved ones.
Many older Australians, those who are responsible for building our country for what it is today, will as a result of these changes be placed in dire financial circumstances, degrading their quality of life, and that of their family’s due to government policy. As a result, many will be forced to enter into schemes such as the predatory reverse mortgage system to fund their later years, a far call from the privileged Australia they grew up to know.