Are the banks doing enough to support retirees?
A recent YourLifeChoices survey asked that exact question – and 87 per cent of respondents (nearly 4000 of you) said ‘no’.
It’s not surprising.
Following the 2018 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, responsible lending has come to the fore. While the Royal Commission found the laws enshrined in the National Consumer Credit Protection Act 2009 were adequate, the application of these laws was found wanting when it came to responsible lending.
One of the consequences of the sharper focus on responsible lending is a lack of access to credit for retirees.
Need a new car? Will that surgery leave you with huge out of pocket costs? Does your home need modification to make it safe and comfortable for your retirement years?
Where your bank may have once provided credit to fund your needs in retirement, the door has closed for most retirees.
Unforeseen expenses
Not everyone has the luxury of a contingency fund to meet life’s unforeseen expenses. With the banks turning their backs on retirees, how can you fund ‘lumpy’ expenses?
We’ve had a number of people come to us to help them fund both planned and unforeseen expenses.
In some cases, retirees don’t want to withdraw a chunk of capital from their retirement savings because it will reduce their income over the longer term. In other cases, retirees simply don’t have sufficient savings to access.
Case study
Late last year Elaine* approached Household Capital. She had little superannuation when she retired; by age 69 it was gone, leaving her reliant on the Age Pension.
At 71, Elaine needed a lump sum to pay for a double lung transplant. Despite maintaining her private health cover, she was advised she would be at least $20,000 out of pocket, plus sundry expenses. Her bank was unable to provide any form of credit, even with her wholly-owned home as collateral, for this lifesaving surgery.
Elaine was able to draw on her home equity to pay for her medical expenses and recuperate with the peace of mind that came from knowing she didn’t have to stress about money. Instead she could finally look forward to enjoying a healthier, more active retirement.
*not her real name
Using home equity to complement super and the Age Pension can help you live a more comfortable lifestyle and enjoy greater wellbeing. It can also provide lump sum payments to meet unanticipated medical or other ‘lumpy’ expenses.
If you have planned expenses, or would like a contingency fund to protect against the unexpected, try the Household Capital calculator to see how a household loan could improve your retirement funding and help you live well at home.
Applications for credit are subject to eligibility and lending criteria. Fees and charges are payable and terms and conditions apply (available upon request). Household Capital Pty Limited is a credit representative (512757) of Mortgage Direct Pty Limited ACN 075 721 434, Australian Credit Licence 391876.
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