If you have an income shortfall, should you sell your assets?

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Coming to a decision over which assets to sell can be very difficult. But if you find yourself in a situation with an income shortfall, you may have no other choice.

In certain circumstances, it makes financial sense to release any money locked away as an asset to help you during times of financial difficulty, to reduce or clear debts.

If you have assets that you’re willing to sell, such as a car, watch or other valuable items, you could consider selling them to release the money and use it to help you while you’re struggling.

Typical items that may have value and can be easily sold include jewellery, watches and antiques. You can also consider larger items, like cars, caravans, bikes and property or land, but these will usually take longer to sell.

Obviously, what you choose to sell will be dictated by exactly how much of a shortfall you need to cover.

If you have two cars, it may be worth investigating how much use you are getting out of your second car.

In retirement, you may find that you do most things with your partner and that you are holding onto the second car purely out of habit. If you drive both cars frequently, but make most of your trips together, selling a second car can be the easiest asset to cash in.

This comes with the additional benefit of significantly reducing your expenses, with no maintenance or registration costs for a second vehicle.

If the second car option doesn’t describe your situation, you should start by looking at assets that you no longer use, or use significantly less than you used to. This may include jewellery or watches, but might also be a boat or a caravan, depending on your situation.

The final option you may want to consider is releasing the equity in your home by downsizing. This can be a very viable option, but it can have an effect on your pension payments and you may be better off searching for funds elsewhere if you are only looking to temporarily fix an income shortfall.

Downsizing is a very creditable option, but you do need to make sure you are doing it for the right reasons.

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Written by Ben

23 Comments

Total Comments: 23
  1. 0
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    Great advice for retired people caught up in the Joe Hockey superannuation disaster, you know the one where good hard working Australias were kicked in the guts.

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      These people have plenty of assets mostly in cash so why not just spend the cash. The asset change was well over due as why were millionaire couples getting welfare? That was just plain stupid. Ifbthat was a kick in guts then you are living in dreamland.

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      Absolute rubbish, Bonny, floss is 100% correct, and your rubbish has been countered logically by others several times in the past (nothing to do with millionaires) hence not wasting any more time to explain it to a die-hard extreme right-winger who is suffering from a severe case of sour grapes & jealousy yourself.

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    Yes it could indeed be a problem for those caught out by the LNP asset test changes. Getting rid of the assets is indeed wise. However the value is often much less than people think.

    A dealer will only pay a certain % of the value for jewellery and antiques.

    Perhaps cashing out some superannuation would also be a solution to shortage of funds.

    The savers obviously are being forced to spend down those savings before getting the OAP unlike those who didn’t save.

  3. 0
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    Yes Rae the good guys come last but at least they can sleep at night. I thought it was strange with the rule changes not one effected our Pollies.

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      The rules do apply to the poles floss. They won’t be eligible for the government pension only the Superannuation pension which is very generous indeed.

      The asset and income test applies to them as well as everyone else.

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      Can’t understand your comment, Rae, as either you are confused or actually misleading. Pollies do not need age pensions as it applies to the people in general and floss is quite right in her comment. Pollies DO NOT have and Assets or Income tests. See below information I have previously provided (link is from 2010, since then their Salaries, hence Pensions, have increased further):

      Link to see what current (new MPs since 2004) pollies get:
      http://www.aph.gov.au/about_parliament/parliamentary_departments/parliamentary_library/pubs/bn/1011/superannuationbenefits

      The current system allows them access to GREAT pensions at 55-60 years (latter age limit being phased in by 2025), with NO ASSETS or INCOME TESTS EITHER, after a mere 8 years service, and STARTING at $92,500 based on 50% of salary of $185,000 (now increased further – not sure to what), and increasing with years of service) – FOR LIFE. Also, they can have additional pensions if they are Ministers, etc. No justification whatsoever for their special pensions!

      In case you want understand MPs greed further (pre-2004 MPs), see the following article after they tried to stop even any small cutbacks on Perks:
      http://www.smh.com.au/federal-politics/political-news/tell-em-theyre-dreamin-high-court-rejects-politicians-bid-for-bigger-pensions-20161011-gs08ko.html

      A key statement for this group (pre-2004) is “Most MPs who entered Parliament before 2004 are entitled to generous pensions under a defined benefits scheme, which pays them around $120,000 a year – regardless of how much they contributed to their fund. Those who occupied senior positions like the Speaker’s chair get even more: Mrs Bishop gets an estimated $255,000 a year.”.

  4. 0
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    and it will affect your Centrelink Pension or Benefits!

  5. 0
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    Thank you all I may be a little harsh on our honest hard working members of Parliament.

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      I don’t think you can be too harsh floss. They are not doing a brilliant job right now are they? They get paid way too much. I remember when government backbenchers earned the same as a top of the scale nurse, police person or teacher. That should have been enough and kept the greedy out of politics.

  6. 0
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    Having assets and always cash strapped is a trap very hard to get out of. And many people I know are in that boat. I wonder why the set up was worked out this way , so when hard working average families come to the retirement place, have super, own their home have an asset or two they could sell, but the time isn’t right, and they actually struggle , all the time. Same sort of feeling when we were young and starting, just made it through the week, it seems sometimes to come back and never ever leave you. The struggle that is.
    I had hoped we lived in a country that saw to it that genuine retirees were able to live comfortably, in their last decade or two , but no so all the time . not a lucky country , when you are done over by politicians and rule changing forever.

  7. 0
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    What’s th point of having assets if you then babe you conpeomisein iour living standards
    Makes no sense
    Besides your house and perhaps a car to get around , all other investment assets might as well be cashed out if you need spending money

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      Many think the pension should give them a life of luxury so are surprised when it doesn’t. Living in poverty is about not being able to get the very basics of life not becuase you can’t afford a new car or around the world luxury trip.

  8. 0
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    Bonny,What makes you think people on a Cruise are Centrelink Pensioners? There are other types of Pensions eg; from Super!

  9. 0
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    A car is not an asset unless it generates an income, same goes for jewellery, boats or caravans.

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      Dear Retired not Knowall, an asset is something that you own that has value, and can be exchanged for cash. It is completely irrelevant whether or not it generates an income. An example may help, If you had cash invested that is producing a negative return due to negative interest rates, it is still an asset but actually produces a loss. Another is if you own shares that lose value they are still an asset. Or are you just trying to be cute?

  10. 0
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    Retired Knowit all(Not Quite) The Things you mention ARE assets,acording to Centrelink!

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      Yes you are right, but, Centrelink are framing the items to suit their needs. If it doesn’t raise revenue and cost to own or maintain it’s a liability. Realising that fact early in financial literacy will go a long way to securing your financial security.

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