37 days until Christmas!
 
Stranger

On the age pension and considering downsizing?


About John

I'm a financial adviser/investor of 25 years, specialising in minimising the impact of black swan events. Black swan events such as the GFC can be devastating and very difficult to predict.


Here are four key things to consider when it comes to the age pension and downsizing your home.

The recent Federal budget contained some incentives for older Australians to sell their homes and downsize. 

There's a few things to consider before downsizing.

There's a few things to consider before downsizing. Picture: iStock

These incentives are specifically for people aged over 65 who want to sell the home that they've owned for 10 years or longer - enabling them to put $300,000 each into their superannuation. The previous restrictions that prevented this will not apply.

However, it remains to be seen how attractive this is, especially to people who may lose all or part of the age pension in the process.

By freeing up capital in this way, it moves from the non-means-testable area (your home), into the area where it becomes means testable. In the process, all or part of your age pension may be affected.

In our experience, people often decide not to downsize when faced with this loss of pension.

However, this action is not logical and puts too much emphasis on the age pension. After all, the age pension is nothing but a source of income and is not inherently better than an alternative source of income.

Consider the following:

1. The money that is freed up by downsizing can provide an income stream and the capital itself can be spent if necessary.

2. More is better than less. If you have more investable funds, you will always be in a better position than if you have less.

3. The age pension will always be there. If disaster befalls and your new-found funds are lost (as distinct from being given away), you will always be able to reapply for the pension.

4. The Health card is one of the most valuable benefits of receiving an age pension and people sometimes believe that loss of age pension will mean loss of health card. This is usually not the case, as the Commonwealth Seniors’ health Card is available to people of pension age who do not qualify for a pension.  Eligibility for the Seniors’ Health card depends on adjusted taxable income – and the limits are quite high, especially when taking account of the fact that superannuation benefits to over-60s is tax free.

| Your rating
No ratings yet


Related stories

Let's take on these crap telcos! Picture: Shutterstock.

Fools in charge of the telco asylum

Comment icon 16

The NBN is just the tip of the problem. Who else is sick of Australia's piss-poor telecommunications services?

Money Politics Business Technology
Expand
About 17 hours ago
(Money & Business)
Get off those railway tracks occasionally.

Suck up every moment of life's detours

Comment icon 16

I have paid a heavy price in my quest for success. This is what I've learned.

Ageing Health Money Work Relationships
Expand
About 19 hours ago
(Money & Business)
The economy should not be central to our society.

My four ideas to fix the world

Comment icon 16

I reckon the system is broke and we need to pull together to fix it. Here's where we start.

Politics Social Issues Money
Expand
1 day ago
(Money & Business)
This gaming practice is enraging people.

Corporate greed leads to gaming PR fail

Comment icon 16

Imagine buying a Star Wars game and not being able to play as Luke Skywalker or Darth Vader.

Money Technology Gaming
Expand
3 days ago
(Money & Business)
Malcolm Turnbull.

Australia's most disappointing Prime Minister

Comment icon 16

Why Malcolm Turnbull tops my list of most disappointing prime ministers.

Australia Politics
Expand
4 days ago
(Money & Business)
Car salesmen aren't trusted much.

Is trust given too freely?

Comment icon 16

We're a trusting lot, us Aussies, as highlighted by survey identifying our most and least-trusted professions.

Relationships Social Issues Business Money
Expand
4 days ago
(Money & Business)
Blog often, it is fun.

Credibility is key to blog success

Comment icon 16

Here's what audiences look for when it comes to credibility.

Expand
5 days ago
(Money & Business)
Get over your fear of presenting.

The art of public speaking - Part 4

Comment icon 16

Present well, or limit your career.

Expand
2 months ago
(Money & Business)
You can attract readers by writing useful content.

Focus on getting your blog content shared

Comment icon 16

Would you believe that 94 percent of readers online want to help spread your message? Here's how to tap this valuable resource.

Money Business Hobbies Bloggers
Expand
2 months ago
(Money & Business)
Solve problems to accumulate wealth.

The smart way to make money

Comment icon 16

Here's the tip, becoming wealthy involves much more than hard work.

Business Retirement Money
Expand
2 months ago
(Money & Business)
Trending stories
Malcolm Turnbull.

Australia's most disappointing Prime Minister

Why Malcolm Turnbull tops...

(Money & Business) 4 days ago
Shutterstock.

What is Australian culture?

I see nothing that makes...

(Entertainment & Culture) 2 days ago
This gaming practice is enraging people.

Corporate greed leads to gaming PR fail

Imagine buying a Star Wars...

(Money & Business) 3 days ago
Poet Robert Frost.

Travelling the road not taken

How on earth did the US,...

(Entertainment & Culture) 3 days ago
Weekly Poll
Memory lane
Y9zv4umv3zuubr9mdxlx
YsPeople proudly supports
I3knc273y4hdqrjd91l4
Yspeople logo new.tiny