Retirement Planning & Experiences

[VPS]

There is the Centrelink reverse mortgage if you are age pension age. I think it is excellent , no need to do this ubiquitous downsizing which is so often suggested .

Does anyone have an experience using this - is this better than reverse mortgage with a bank?

I don't want to move because I'm in a great location and will be able to stay for many years here but want to release some capital for more travelling

 

[mrsterryn]

@VPS the old scheme was so incredibly coughbersome but this one appears to be a lot more easier though it is limited . I think when someone wants to stay at home and money is an issued that this would make life easier .

https://www.servicesaustralia.gov.au/home-equity-access-scheme

 

[CaptJCool]

Does anyone have an experience using this - is this better than reverse mortgage with a bank?

I don't want to move because I'm in a great location and will be able to stay for many years here but want to release some capital for more travelling

The take up rate of reverse mortgages is lowish
Estimated 40,000

The Rise of Reverse Mortgages in Australia - Lextech

Reverse mortgages are increasingly becoming part of Australia’s retirement finance mix. Once seen as niche or last-resort products, they are now used by tens of thousands of older Australians to access the value of their homes without selling or moving. According to the Australian Government’s...

www.lextech.com.au

Interest rate is 3.95%

A no negative equity guaranteeapplies to Home Equity scheme

This is different to a reverse mortgage provider

Reverse mortgage and home equity release - Moneysmart.gov.au

Understand how a reverse mortgage or other equity release product works. Get independent advice before you go ahead.

moneysmart.gov.au

So

4% compounded annually on $100,000 over 30 years would grow to approximately $324,339.59.

Breakdown:
- Principal: $100,000
- Interest: $224,339.59
- Total: $324,339.59

This calculation uses compound interest formula: A = P(1 + r)^n, where A is the future value, P is principal, r is annual interest rate, and n is years.

 

[Brissy1]

"Sure, individual circumstances might make staying put making sense and I understand
Emotional connections is a double edge sword. It can impose further costs and cause significant friction even with staying put.
My point is that downsizing should not be off the table.

There is a limited one off downsizer contribution of $300K per person (x2if couple) when downsizing - separate and in addition to any non consessional contribution. Potentially when downsizing a couple can put into super: 2x $300K downsizer contribution + 2x$360K non concessional contribution using bring forward arrangements - so potentially $1.68M in one year. This contribution would then pass to estate tax free upon Exit."

My mom and dad will never take advantage of the downsizer contribution. They are too risk-averse and also don't have the motivation to do the paperwork. I offer my time to do it for them but they say no. We, as a family, are much poorer than we would of been because of my dad's total lack of tolerance to risk and motivation in doing paperwork to save taxes and maximise expectation. And he would not let my mother or I do these things on his behalf. Lucky he's on a 6 figure lifetime annuity as a defined benefit pension. I ain't gonna be so lucky.


"Spending the kids inheritance is a growing trend."

My parents are on fully reversionary defined benefit pensions that's six figures for life. Lucky them.
My mother did get a big inheritance from her parents, being the only surviving child (and me being the only grandchild). Lucky her. There's no way they can run out of funds in their lifetimes.

Good on them, I wish my parents had spent more on themselves. My parents worked hard and spent a lot on raising us, and deserved to have spent all they had in retirement on themselves.
(btw you might want to check your maths there).

 

[VPS]

The take up rate of reverse mortgages is lowish
Estimated 40,000

The Rise of Reverse Mortgages in Australia - Lextech

Reverse mortgages are increasingly becoming part of Australia’s retirement finance mix. Once seen as niche or last-resort products, they are now used by tens of thousands of older Australians to access the value of their homes without selling or moving. According to the Australian Government’s...

www.lextech.com.au

Interest rate is 3.95%

A no negative equity guaranteeapplies to Home Equity scheme

This is different to a reverse mortgage provider

Reverse mortgage and home equity release - Moneysmart.gov.au

Understand how a reverse mortgage or other equity release product works. Get independent advice before you go ahead.

moneysmart.gov.au

So

4% compounded annually on $100,000 over 30 years would grow to approximately $324,339.59.

Breakdown:
- Principal: $100,000
- Interest: $224,339.59
- Total: $324,339.59

This calculation uses compound interest formula: A = P(1 + r)^n, where A is the future value, P is principal, r is annual interest rate, and n is years.

I won't be needing it for 30 years and if I do I doubt I'd be travelling anywhere

Thanks

 

[mel-world]

We have downsized and have recently started a HEAS through Centrelink even though we are self-funded at the moment. (Many more days like yesterday and we will be on an OAP sooner rather than later).
Our reasoning is that the value of our downsized property is rising faster than the amount we withdraw per fortnight plus the interest. Hopefully this will continue. Helps with everyday living to preserve what's left in Super a bit longer. Anyway, we only have on child and we have assisted him to buy his own property so he can get what's left.

I volunteer a couple of times a week delivering meals to the elderly in our council area in the affluent eastern suburbs of Melbourne. There are a number of very old people with early onset dementia still living in a very large house in need of some repair and with a garden full of weeks. I feel sorry for them as they want a chat saying that I am the only person they will see all day and they can only afford a carer once or twice a week. They cannot afford to move (or refuse to do so) but are still so asset rich.