Retirement Planning & Experiences

[mrsterryn]

No wonder the hospitals have wards full of older Australians who happily occupy a hospital bed for ZERO cost

Actually I believe if a person is in hospital under the guise of waiting for a nursing home bed, not due to needing hospital care they can be charged a daily fee. They can also be eligible for rent assistance in those situations
"Accommodation in hospital
An income support recipient who is a nursing-home type patient of a hospital as defined by the Health Insurance Act 1973 may be eligible for RA if they have been provided with accommodation and nursing care, for a continuous period of over 35 days."

 

[JohnK]

Actually I believe if a person is in hospital under the guise of waiting for a nursing home bed, not due to needing hospital care they can be charged a daily fee. They can also be eligible for rent assistance in those situations

Or they can just let them die and that way they are not a burden.

Our aged care in Australia is horrendous. Up to $1mil or more refundable deposit. And then $70-$80K/year on top to be bullied and not taken care of properly and with dignity? Seriously? What happened to the Royal Commission? What happened to jailing and de-registering the bullies?

That's why we're off to Thailand if we ever need care. I know we have a house but top rental accommodation away from Bangkok is at most 30,000 baht/month, top health insurance around 250,000 baht/year and really good home care 250,000 baht/year. I'd be stunned if you needed more than 150,000 baht/year on food at home.

 

[kookaburra75]

Its not as simple as I first thought as a few % extra returns from well placed investments adds up quick. When the time comes I will need to look into diversifying into some other investments that have decent returns.

Another thing you need to think about, if you haven't already, is make sure your will is up to date and your wishes regarding funeral plans etc are known to your family or executor. It makes things a lot simpler when you shuffle off - as it happens to all of some time.

 

[Pushka]

No wonder the hospitals have wards full of older Australians who happily occupy a hospital bed for ZERO cost

They can't get out if they want to. There are no places. Currently over 300 in SA's hospitals unnecessarily.

 

[Brissy1]

They can't get out if they want to. There are no places. Currently over 300 in SA's hospitals unnecessarily.

And it's not a new problem that suddenly arose, I know personally that it was an issue 20 years ago at Brisbane's flagship RBH.

 

[hydrabyss]

Depends - several factors
Place of residence
Other assets outside of pension/super/annuity
Inflation and the value of money
Domestic partner and their financial position
Fixed costs - house insurance, house maintenance, private health insurance, car expenses.
Another way to put it is whether the $80K is a 100% available for discretionary spending outside of the fixed costs above. If so then even Sydney is fine.

One way to reduce housing fixed costs is to downsize at retirement because of:.
A large house insurance (not apartment) in Sydney can be $15000 pa then add in private insurance for a couple $10,000 and that is about $25K pa or $1000 pw (edit $1000 /fortnight - thanks @Steady for maths lesson)
People forget to factor in House maintenance costs after retirement- maybe 1-2% of value of house per year depending on the house. $4M house in Sydney would be $80,000/year. . The older the house the higher the maintenance budget. Downsizing would/can reduce that significantly

Its crazy to think how many have so much tied up in the family home and that is the largest asset they own. It has value but hard to live off when you stop working and the costs dont go away to maintain it.

 

[mrsterryn]

Its crazy to think how many have so much tied up in the family home and that is the largest asset they own. It has value but hard to live off when you stop working and the costs dont go away to maintain it.

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 .

 

[drcam]

"Our aged care in Australia is horrendous. Up to $1mil or more refundable deposit. And then $70-$80K/year on top to be bullied and not taken care of properly and with dignity? Seriously? What happened to the Royal Commission? What happened to jailing and de-registering the bullies?"

The government still pays for the majority of total aged care costs. Go anywhere else in the world and the elders and their children pay for the entire cost. This is why in the USA the median inheritance from one's parents is zero (not that I assume receiving any while I plan my retirement).

 

[Quickstatus]

no need to do this ubiquitous downsizing which is so often suggested .

I dont see the point in living in a 2 storey 4 bedroom house when there are only 2 people in it. I accept lots of permutations where in some cases it makes sense.
While the interest is discounted (currently 3.96%), it would be borrowing to pay for the upkeep of the house + insurance etc. + maintenance + excess costs compared with a downsizer.
The only reason i can think of is that the owner thinks the house is going to appreciate by at least 4% net of holding costs over the forseeable future.

 

[CaptJCool]

I dont see the point in living in a 2 storey 4 bedroom house when there are only 2 people in it. I accept lots of permutations where in some cases it makes sense.
While the interest is discounted (currently 3.96%), it would be borrowing to pay for the upkeep of the house + insurance etc. + maintenance + excess costs compared with a downsizer.
The only reason i can think of is that the owner thinks the house is going to appreciate by at least 4% net of holding costs over the forseeable future.

I do see the point in staying put

Familiar neighbourhood surrounded by friends and activities
Ideal amenities
Location location location

Versus
Stamp duty
Agents fees
Removal costs
GST if buying new residential
The actual packing up and emptying out the larger house - what to do with the excess furniture
risk of Selling in the same/next sales cycle
Risk of relocation to the far flung
Smaller house and no backyard
The hope of gifting an inheritance to multiple children

These are not solely financial decisions
They carry emotions and memories
Accessibility to family and friends
There can be significant disputes between the couple about where and what to buy, and moving into the inner city circle & suburbs may not be particularly affordable anyway.

Having seen my parents move 4 times after retirement, including downsizing, and copping a fair load of farm kid labour to help out, can’t say I’m fond of the downsizing idea.

As for myself, I downsized some years after divorce into city apartment living and am pragmatic that on a single income “I can’t afford a proper house in the suburbs anyway”

 

[drcam]

I'm in my mid 40's and my school friends' surviving elderly parents are all staying put in their large houses, most of them are now elderly widows.
None of them have gifted their houses to their children (my colleagues) who have their own families and are having to get by paying mortgages in what would be considered "poorer" areas of Melbourne. I imagine that CGT rules are one reason why this is happening.

My own parents live interstate but being fit and well they have no intention at 77 of downsizing in the foreseeable future. They spend 6 months overseas on business class travel and high end cruises every year but they won't even lend me the keys let alone leaving their house to me.

 

[Quickstatus]

I do see the point in staying put

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.

They spend 6 months overseas on business class travel and high end cruises every year but they won't even lend me the keys let alone leaving their house to me.

Spending the kids inheritance is a growing trend.