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

Deciding to sell assets can be very difficult. What should you sell first?

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.

RELATED ARTICLES





    COMMENTS

    To make a comment, please register or login
    floss
    10th Nov 2017
    11:29am
    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.
    LiveItUp
    11th Nov 2017
    7:38am
    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.
    GeorgeM
    12th Nov 2017
    1:14pm
    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.
    Rae
    10th Nov 2017
    12:14pm
    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.
    floss
    10th Nov 2017
    1:01pm
    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.
    Rae
    10th Nov 2017
    1:59pm
    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.
    GeorgeM
    11th Nov 2017
    8:28pm
    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.".
    rob101
    10th Nov 2017
    3:43pm
    and it will affect your Centrelink Pension or Benefits!
    floss
    10th Nov 2017
    4:03pm
    Thank you all I may be a little harsh on our honest hard working members of Parliament.
    Rae
    10th Nov 2017
    7:56pm
    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.
    john
    10th Nov 2017
    6:38pm
    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.
    LiveItUp
    11th Nov 2017
    7:41am
    Many pensioners live very well. Go on a cruise and you will see that they make up the majority of the guests.

    10th Nov 2017
    9:49pm
    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
    LiveItUp
    11th Nov 2017
    7:45am
    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.
    rob101
    11th Nov 2017
    11:31am
    Bonny,What makes you think people on a Cruise are Centrelink Pensioners? There are other types of Pensions eg; from Super!
    Retired Knowall
    11th Nov 2017
    12:16pm
    A car is not an asset unless it generates an income, same goes for jewellery, boats or caravans.
    Sceptic
    14th Nov 2017
    12:47pm
    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?
    rob101
    11th Nov 2017
    1:39pm
    Retired Knowit all(Not Quite) The Things you mention ARE assets,acording to Centrelink!
    Retired Knowall
    11th Nov 2017
    5:56pm
    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.
    rob101
    11th Nov 2017
    7:00pm
    Thank you,Retired Knowit all,BUT having spent over forty years in Social/Market Research and also in the Finance Industry I think I have a fair grasp of Financial Literacy.Also when it comes to Centrelink it doesn't matter in the slightest WHAT you think about assets or otherwise.If you have a look at the list of what they consider "deprived Assets" you may get a shock.Little things like Tithing to your Church or forgiving a Loan.Paying out a Loan you have Guaranteed for a Child,to name but a few.
    Retired Knowall
    12th Nov 2017
    10:45am
    Regardless of what a Govt Body classifies as an asset for their obvious reasons, if it is not generating an income or at least paying it's own way it's a LIABILITY. If you own a car that is costing you more than it's worth or more than it would cost to get around in other means ITS A LIABILITY. Centrelink or any other rules may and do change over time but the basic principle remains the same.
    floss
    12th Nov 2017
    1:50pm
    Spot on RK you are on the ball with this one.
    mike
    13th Nov 2017
    3:46pm
    Answering Floss, a bigger kick in the guts is the Centrelink shock, those who lose their part pension AFTER 1/1/2017 , even a day later, get a letter from Centrelink telling them they have lost their PCC and they will NOT get it reinstated. Thus a part pensioner who has assets between $817.000 and $1.25million on1st January will have it reinsataed, but those who had LESS than $817.000 and lost the PCC , EVEN a DAY LATER, do not. Yes a real kick in the guts