In the 2014 Federal Budget, the federal treasurer highlighted the fact that the world is changing, and that living longer is getting increasingly difficult for those who don’t have the financial security to maintain their standard of living.
According to the Federal Government ‘The age of entitlement is over’…
In his speech on budget night to all Australians, Joe Hockey stated that access to the pension is too generous, and that the rate at which pension payments are currently made needs to be slowed. Australia is no longer in a position to be able to support its aging population of baby boomers, especially in an economic environment of decreasing tax revenue from a dwindling resources sector.
The realisation of this fact is to take further effect on the 1st of January 2017 when the Federal Government will reduce pension payment rates, of which is expected to adversely affect approximately 300,000 Australians, with some to lose their pensions completely. Payment rates will decrease by $3.00 per fortnight for every $1,000 in assets over the threshold. The Federal Government has also hinted at allowing bracket creep to eat away at the number of people who qualify for the aged pension.
Unfortunately, retirees will increasingly need to look to other options to source money to fund rising health care costs, including visits to the doctor, and the increasing cost of medicines. Another cost that will hit everyone is the cost of energy. Stemming from international competition, electricity, gas, and transport fuels are all rising at an alarming rate, of which are being further compounded by the government’s increasing excise taxes. These costs will also increase the cost of public transport, as well as day to day essentials such as fruit and vegetables.
Unfortunately, pensioners are those most vulnerable to the Australian Federal government's austerity measures, with those that are asset rich and cash poor most exposed. Many retirees will be asking themselves if they can afford to maintain your current lifestyle without having to cut corners. As result, many will no longer be able to travel to visit family and friends on their current pension supported income.
It is increasingly likely that some pensioners will have no choice by to counter such influence by selling their properties through Sell and Stay type arrangements in order to maintain their lifestyle. Such arrangements enable many in such positions to sell their property, unlock their property's value, and maintain a comfortable lifestyle, all without needing to move from their home.