24th Apr 2018

Rather than downsizing, some retirees are buying bigger homes

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How upsizing protects your pension
Olga Galacho

So you’ve had a bumper couple of years thanks to some wise investments … or maybe the housing boom has doubled the value of your second property. Either of these scenarios could push the value of your assets over the limit for a part-Age Pension.

Cashing in the investments and parking the funds elsewhere probably won’t help you avoid the Centrelink razor either, because, wherever your wealth is stashed, it can’t escape an assets test.

Luckily, retirees who have come to rely on a part-Age Pension and do not want to sell down the value of their investments do have one handy option – upsizing.

With all the talk about the Government’s superannuation incentives to downsize, not a great deal of attention has been given to going in the opposite direction.

Asset-rich part-Age Pensioners approaching the limit beyond which their wealth precludes them from welfare are being advised by savvy accountants to sell their ‘modest’ homes and liquidate some of their investments. This should help them become sufficiently cashed-up to go hunting for a very lovely home that is worth considerably more than their original one.

 


Below are the assets test limits for full and part-Age Pensions:



As the home you live in is not assessed for the purposes of the Age Pension, it could be worth $300,000 or $3 million. Centrelink couldn’t care less because, at least for now, family homes are not factored into the assets equation.

Other types of investments, however, are very much more interesting to the assessors. Under new asset rules introduced in January last year, 90,000 pensioners lost their entitlements, according to information from the Department of Social Security.

When the new rules were first mooted, David Middleton of Middletons Securities told news.com.au that: “The bottom line is that a home-owning couple with $800,000 in assets will soon see their Age Pension fall by around $14,000.

“Because the family home is not counted as an asset, it can essentially become a bricks and mortar bank account to be drawn against as needed,” he said.

“This might just ring the death knell on the days where an empty-nester couple chooses to downsize from the family home to something more manageable – and instead we may see them look to buy something that is actually more expensive.”

Naturally, the Government isn’t keen on retirees being encouraged to buy more valuable homes than the ones they already live in. That perpetuates reliance on welfare by retirees, when what the Government is aiming for is to make them become more self-reliant. That was part of the reasoning behind the last May Budget’s downsizing initiative to allow retirees to boost their own superannuation funds through a non-concessional $300,000 contribution, after they sold their house.

If you do decide to upsize, it is worth keeping in mind that, as a general rule, the transaction costs – such as stamp duty and marketing – can swallow up to 10 per cent of the value of the home you are selling.

Would you ever consider buying a bigger property than the one you already live in? Do you think it is fair that pensioners who live in very expensive homes do not have their family home asset-tested?

All content on the YourLifeChoices' website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care, but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness with regard to your circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances. Financial comments provided by readers cannot be relied on as professional advice, but as general comments only.

 

Are you eligible for an Age Pension? Do you know your rights? The RetirePlanner™ tool has all the information you need. 

 

Related articles:
Age Pension changes ruining retirement
90,000 lose pension entitlements
Which assets to sell first





COMMENTS

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Cowboy Jim
24th Apr 2018
10:26am
No brainer really if you are into family wealth building for your children and grandchildren.
You can sit in your million dollar house, possibly get your full pension and benefits and when
you pass on the off-spring get your assets tax free. If your assets are somewhere else they are counted, you lose the pension and you only pass a modest home to your children. I can see that clearly, my mates all want to give the next generation as much as possible - could be the Aussie way. I do not have that amount of money and have no children - if I did I'd think about doing exactly that - upgrade! People who have a lot of dough when they are old most likely also paid a lot of taxes to get there. Lotto does not strike often.
One of the reasons the countries with universal pensions have estate duties or as we commonly call them - death taxes.
Chris B T
24th Apr 2018
11:27am
It is wrong to say there is no value placed on Homes owned by any one claiming OAP.
Using one example Couple Homeowner and Non Homeowner have a difference Of Asset value of $203k then there is a rental assistance to which the Couple Homeowner does not receive this has an asset value of $169k.
This example gives an arbitrary value for a Couple Homeowner $372k.
This made up using the difference of Asset Tests for singles surprisingly is the same.
This is the Value They are using already ($372,000)
Cowboy Jim
24th Apr 2018
11:42am
Quite correct, Chris. The house owner is only better off in an expensive house. People like us in $375'000+ homes have the same expenses as the people living in a place worth $1 million+. And when you take into consideration the repairs, the rates (I get some council rebate on that) and then the rent assistance, it makes me wonder whether I would not be better off renting, taking in the extra $203k in assets I would be allowed to own.
Sundays
24th Apr 2018
12:16pm
Except rents are too high and rent assistance quite low
Rae
24th Apr 2018
12:22pm
Depends where you go to live. Rents are cheaper in the regions.

Rents are not too high it's property prices that are too high. Rents are constrained by incomes. Of course high income earners can afford the very desirable areas so rents are high there.

Rental yields are less than 2% on todays crazy house prices.
Sundays
24th Apr 2018
1:26pm
Where I live on the Sunshine Coast it’s almost impossible to rent under $300 per week for one bedroom which must be very difficult on the OAP
Chris B T
24th Apr 2018
3:21pm
To add to mixed up system a non home owner could buy a Very Large Expensive 5th Wheeler or Caravan put in a Caravan Park.
Then claim Rental Assistance.
Some of these Items are apartments on wheels no need for Tow Vehicle as you arrange for someone with a large truck or low loader to move it for you every time you want to try something new.
This would be within the difference of asset test between non homeowner and homeowner.
So tell me again how badly non homeowners have it.
[;-(0)
Old Geezer
24th Apr 2018
3:36pm
There are thousands out there doing just that. Winter up north and summer down south. There is a caravan park about 20 minutes outside Townsville that only exists due to these modern day swaggies. In fact I'd say it was built just for them as no one under 50 can stay there.
Rae
24th Apr 2018
4:04pm
Sundays have you checked the price of houses and units on the Sunshine Coast. It is an expensive area full of two income families who work in Brisbane or have businesses there.

Of course no one will pay that much for a property to rent at a loss. That is why it is unaffordable for welfare recipients. There are plenty of nice but cheaper areas. Stanthorpe had rentals for around $220 last time I looked. Same distance to Brisbane just a different direction.
Cowboy Jim
24th Apr 2018
4:53pm
Yes Rae, have been to Stanthorpe recently and saw the rentals, was
tempting in my view for someone on an age pension, even have a Woolies and a few clubs with reasonably priced meals. Fact of life - the closer to the Ocean the dearer the accommodation.
Old Geezer
24th Apr 2018
4:59pm
It gets a bit chilly up around Stanthorpe in winter. Thinking of doing a van pub crawl up that way next week or the week after. Lots of pubs up that way to stay at and try out their meals.
Sundays
24th Apr 2018
6:22pm
Yes Rae, I own up here and prices are a lot higher than years ago. There are about 20% of people over 65 and I have seen a trend with retired homeowners moving further north to places like Barwon Heads to free up capital. . Low income earners to places like Gympie and Dalby. Despite that there are a lot of the hidden poor. For some, it’s just not that easy to move
OnlyGenuineRainey
25th Apr 2018
7:11am
The aged pension system is ridiculous. For some homeowners, it costs $500 a week or more to live in your own home when rates, maintenance, insurances and pension loss are all counted. Yet you could rent for less than that and get rent assistance. Then we have multi-millionaires getting pensions while strugglers do not. And people with multi-millionaire younger partners get pensions while strugglers do not. And now Short-on wants to totally demolish the income of the struggling SFR with an unfair tax that ONLY hurts battlers (despite his lies saying it's targeting the wealthy).

The problem is that every suggestion of change to the pension system makes it 1000 times WORSE. Nobody ever comes up with sensible solutions. All they can think about is how to take take take take take take take from senior Australians. Now the Grattan Institute wants any home over $500,000 in value included in the means test. I'm at the point of giving my home to my kids and renting it back - or living in a lavish RV and claiming rent assistance. Honestly, there is just no point in working and paying tax in this country. All we hear about is the ''poor pensioner paying rent needs more'' so take everything off anyone who worked and saved. No wonder there are so many poor pensioners paying rent!

Abolish the stupid assets test and we'd have far more workers striving and paying tax, and far less needy.
Captain
26th Apr 2018
8:06am
OGR, Scott Morrison has announced that the Medicare Levy is no longer required as extra tax receipts of $8 bn have been found. If the fool had any sense he would have reinstated the old Assets Limit that only cost $2.4 bn over 5 years (or scrapped it altogether) and increased the Medicare Levy by 0.5% or 1.0%.

Unfortunately current politicans seem to have a very limited memory time span and don't remember who they have crossed . However the people who lost their part pensions and those retiring after 1st January 2017 with more than the current asset limit will remember the demolishing of theirretirement plans by the Liberals and the Greens.
Rae
26th Apr 2018
9:14am
Yes Captain. That $8 billion came from somewhere after all.

The Medicare levy is not objected to by taxpayers and a reliable efficient health system is important to people according to surveys. I also thought the $5 payment for services not outrageous either if it helped to build new hospitals and lower waiting times for medical services needed.

The very poor could have easily been quarantines from payments as they are now.
Toddy
24th Apr 2018
11:41am
This is why ALL assets should be included in the assessment. The pension should be available to those who need it, not for those who are using it to build wealth for their children. I do think that ALL retirees should however be entitled to the healthcare card.
Rae
24th Apr 2018
12:33pm
The pension should be available to all who lived, worked and paid taxes over a certain age. The sheer inequality of the current system will cause huge problems as people see it as very unfair.

Why should someone who saved regularly for retirement miss out while the guy next door who spent that money every week clubbing gets a full pension. The saver is rightfully annoyed that they are being discriminated against for spending choices.

The clubbing guy spending up on trying to win lotto may not have a house either and be paying rent as he believes he couldn't afford a deposit or mortgage and he'd be right.

The difference really is only that $50 to $100 spend every week for decades between the self funded retiree and the one that has nothing but the OAP.
Radish
24th Apr 2018
5:35pm
Totally agree...all assets should be included in test and everyone over 70 should get the concession card.
George
25th Apr 2018
12:36am
Rubbish. There should not be any Asset or Income tests at all.
All should get Universal Pension at Age 65 (subject to Residence of say 15 years), then such market distortions (and need for such advice from fin advisers to get around stupid rules for pensions) will disappear as all can buy or sell as their personal needs dictate.
OnlyGenuineRainey
25th Apr 2018
9:02am
Toddy and Radish, if all assets are included in the test, there's no reason to have any. Everyone will either stop saving for old age or find other ways to manipulate to APPEAR to have none. The current system is driving manipulation because it's UNFAIR and it punishes doing what's good for the nation. And you just want to make it worse!

As Rae says, why should the clubbing guy get up to $2 million in handouts from the taxpayer over the course of his retirement, while the guy who worked hard and went without to save gets nothing? Why shouldn't I be allowed to go without to have home help when I'm 85 or to leave wealth to my kids if that's my choice?

What you are saying is that unless you are very rich, the only lifestyle choice that is acceptable is to spend spend spend spend spend - or restrict earnings - so that you retire poor. That's a recipe for economic disaster for the nation.
Old Geezer
24th Apr 2018
11:51am
Great way for family to store their wealth. Set oldies up in a $10 million house on full OAP. It doubles in 10 years and no tax is payable so the family have a tax free $10 million.
Cowboy Jim
24th Apr 2018
11:53am
Bravo, OG! That is the way it's done and that is probably the spot they should shine the light on.
Rae
24th Apr 2018
12:35pm
You can bet the immigrants are wise to this means of storing family wealth for the future. That house can also be used to leverage other assets and homes for family members as time progresses.

Clever way to provide housing for kids and grandkids.
Kathleen
24th Apr 2018
12:43pm
You really have a problem with people on the pension. How many people have a ten million dollar house?
If you bought a $300,000 house ten years ago, it is now worth double that. It might have four bedrooms and two bathrooms. Not luxurious but not a tiny unit! Mind you, everything has doubled in the last ten years.
Don’t exaggerate!
Old Geezer
24th Apr 2018
1:19pm
Agree Rae all the grandkids could buy a house and not pay a deposit as well. Awesome idea.

Kathleen you really don't get it. All you have to do is think beyond your own situation to what is possible.

One could have many millions and still get the OAP at 65. All it takes is a bit of planning.
George
25th Apr 2018
12:39am
No, Rae, if you give loans to family members they will be treated as your assets and decrease your pension. Bad idea. But I agree with OG that upsizing is a good idea for those who were hit unfairly by the stupid Liberal Govt changes to the assets test.
OnlyGenuineRainey
25th Apr 2018
8:55am
Kathleen, I really have a problem with MOST people on the pension, because I can't find one who isn't way better off than I am, having earned two to three times my income through their working life and had far less challenges to deal with. And now they are screaming that SFRs should be unfairly taxed and forced to live on their savings until they are poor, while demanding more and more and more for pensioners and renters.

I'm heartily sick of it. I've been the champion of the disadvantaged, campaigning for years for them to have a better deal, but the selfishness and greed I'm seeing now is sickening. And what is mind-boggling is that those who are cheering demolishing the lifestyles of SFRs to give more in handouts can't see that doing that IS THE PROBLEM and it's going to ultimately hurt the poorest the most. When we all quit striving and start contriving, the pressure on the taxpayer will be so high that pensions will have to further reduce.

I had hoped Labor might produce some sensible answers, but all they want to do is make things 1000 times worse by letting the rich keep their franking credits and stealing 30% of the income of low-income battlers who are not claiming pensions.

If retirees joined forces and demanded equality - an equal pension for everyone, regardless of circumstances, combined with a fair tax on retirement income over a generous threshold - we MIGHT have some hope of controlling the soaring cost of pensions. While we continue to force people to manipulate and contrive to avoid being robbed of everything they earned, the country will continue to go backwards. Work and saving should be rewarded. Until it is, there is no hope of improving the economy.
Old Geezer
27th Apr 2018
3:29pm
George you don't give loans to family members you just use the equity in your mansion instead of a deposit.
Magic Touch
24th Apr 2018
12:00pm
Cowboy Jim you are right, australian who had work so hard to get there with that investment had paid a lot of taxes should enjoy life with universal pensions. What about estate duties when they already bye bye, it,s all up to their children. So why they had to put up with it, this goverment it,s not fair to the older australian.
Rae
24th Apr 2018
12:17pm
The Government has a very strange idea of how to go about making retirees more self reliant. By removing incentives to save, investing heavily in the family home is the last option left unless you are extremely wealthy.

And yes you can draw down funds as you need them. A Line of Credit isn't counted by Centrelink.

A property with a granny flat that could be rented for cash is another option people are using to boost their OAPs.
Kathleen
24th Apr 2018
12:48pm
Spot on! Most of us only have the one asset, our home.
Our cars are old. Most have little to no money in the bank but if we bought a nice home in a good location, not in the big cities, they have doubled in value in ten years or so.
Makes a lot of sense to do this!
Rae
24th Apr 2018
1:32pm
Yes Kathleen. It's not just the pension money but all the discounts and concessions that go with it, including the franking credits if the ALP are elected.

I had my part pension promise snatched away by a greedy government and have no problem now with using every dirty trick that's legally allowed. I owe the government no loyalty at all after being betrayed by them.

I've cashed in Australian investments in favour of international ones. This country is going broke very very quickly indeed.
OnlyGenuineRainey
25th Apr 2018
8:41am
Likewise, Rae. I'm fed up with both the gross inequity and the nastiness of those who constantly bash SFRs and support robbing them to increase handouts.

I went back to work when I realized I would be denied a part pension as punishment for saving. Now, at the point where I'd like to retire properly, I'm faced with losing 30% of my very small retirement income if the ALP wins government. What did I do wrong? Worked my guts out and went without a lot to save - despite a minimal income and a great deal of ill-health, family crisis, and both a disabled child and partner.

Now, I need a large home because of a family situation that requires me to house grandchildren for extended periods during the year, but apparently it's a crime to have that also - never mind that it's saving the government a fortune and ensuring children have the love and guidance they need to grow to be productive citizens.

This country is full of sick, greedy, self-serving people with not one ounce of decency or respect and no consideration for the fact that their ASSUMPTIONS and AVERAGES might not always apply. Some people DO have special needs that are not catered for within the ridiculous rules that are typically applied.

The country will continue to go broke if we continue with this ridiculous ''needs based'' welfare that is forcing everyone to try to appear needy to avoid being robbed of everything they worked for.

No, Kathleen, ''most of us'' do NOT only have one asset, an old car and little or no money in the bank. Only the few very disadvantaged and those who didn't plan and save for retirement are in that position. ''Most'' have either enjoyed big spend-ups to reduce assets before retirement or contrived to appear poor, because that's the ONLY way to avoid being unfairly deprived. And the result of that is heavy pressure to keep pensions and other assistance at a minimum, because too many are dependant on the public purse.

The solution, if only folk like you would realize it, is to be MORE generous to those who worked and saved well. Make it worth the effort and let people enjoy the rewards of their efforts and there would be far less pressure on the welfare system.

The wealthy need to pay their way, but Labor is NOT making the wealthy pay one cent more. It is attacking the struggling self-funded who worked hard and saved well to try to ensure modest comfort in old age, and making them worse off than if they hadn't bothered. It's making pensioners and the rich the favoured elite, and those with lower incomes and modest assets the target of unfair taxation and unfair deprivation. (And I WAS inclined to favour Labor over the LNP until Short-on showed his true colours!)

Oh, and how can pensioners be greedy? Very easily. Having little doesn't make you unselfish. They are greedy if they constantly demand that others suffer for having made different life choices. They are greedy if they think it's ''funny'' that other people are deprived of the lifestyle they worked so hard to attain.

What this country needs is for everyone to put aside their envy and selfishness and unite to demand a fair deal for all - no special favours for this group or that. Let those who worked and saved enjoy the benefits they earned. And let people choose whether to live it up early, delay enjoyment, or save to leave wealth to their heirs - with NO penalties for any of those choices. While we continue to favour people who didn't save, we'll have lots more irresponsible people and lots of manipulators contriving to appear needy.

In the meantime, I have to find ways to appear needy, because it sure isn't doing me one ounce of good being honest and hard working.
Rae
25th Apr 2018
11:17am
Yes OGR. The predictions of unfair and unsustainable are coming true. It is certainly good to buy a larger home in a better location if you need it and thus gain the OAP with a bit of savings and the opportunity to use a line of credit if needed.

I'd go for a bit of land, not rural though, if possible so the grandkids can put granny flats on later if needed. With the current migration levels and tendency to settle in the cities our kids won't be able to afford to live in Sydney or Melbourne.

All the talk about self funding is nonsense now. The Government has pretty much destroyed Superannuation.

Those relying on the OAP and envious of savers have no idea how little they needed to put away each pay to also have something at the end.

Unfortunately around 64% of all workers just spend everything they get, making all sorts of excuses about how they can't possibly save.

The 36% of savers just put the money, $50 or whatever, away first every fortnight. It's not rocket science.

Life is usually easier for savers but not under the LNP and the ALP are looking like they just might be leaping from the pan into the fire.
OnlyGenuineRainey
25th Apr 2018
12:30pm
The ''I didn't earn enough to save'' excuse always stuns me, because it always comes from folk who were far, far better off than I was. But then I look at younger families and see the unbelievable waste in families that are whinging that houses are unaffordable! No, they are not! One family I know throws clothes down a huge shute where they pile up for months and when it's full, they fill wash baskets, but they never wash. When they run out of clothes, they buy more. But they can't afford a house! I see couples who can't afford a house eating breakfast, morning tea, lunch and afternoon tea in coffee shops every day, and going out to dinner regularly. A neighbour owns his home but can't afford the rates, but he took three teenage kids to Bali for their annual holiday. These, I suppose, are the ''poor pensioner retirees'' of tomorrow! And they and their ''poor pensioner parents'' who didn't save continually scream that those of us who did save were ''lucky'' and should forfeit it all. Sorry, people. THERE WAS NO LUCK INVOLVED. I know few would choose the lifestyle I chose, but they didn't have to. Even most on relatively low wages could have attained substantial assets if they had just put a small amount away every week. It's a habit, and it's not a hard one to form.
Sundays
24th Apr 2018
12:22pm
I’m sure it’s a strategy being used. Buying a more expensive home doesn’t always mean bigger if you buy in a better area, could even be a unit. The problem is that Governments will eventually twig, and put a limit on the value of the house people can own. If you were just over the limit spending on upgrades to your existing home and holidays is another strategy
patti
24th Apr 2018
12:26pm
A group of us are considering buying a large property and sharing the resources as we age. It could be cabins built on acreage, or a house with several bedrooms and different living areas. I wonder how this would affect our pensions? We are nervous about living alone as we age and would prefer to buy in aged care rather than go to a nursing home. How would this be affected by assets test I wonder......most of us have the age pension as sole income, and those who don't own property can rent from those who do. Workable scheme? I think it could be
Rae
24th Apr 2018
12:40pm
Yes patti. A few of us are looking into it. A good accountant and solicitor is needed. The purchase deeds will need careful consideration but existing arrangements do exist now for these types of living situations.

Definitely cheaper to buy in help as needed rather than the huge costs of nursing homes provided independent living can be maintained.
Old Geezer
24th Apr 2018
1:26pm
Now if you buy into a nursing home you get rent assistance. Do you get rent assistance if you buy a transportable home in one of those over 50s retirement parks? I know you get it if you haven't got a house and park your van in a caravan park.

Put property into a trust that is owned by a company and if the answer to the above question is yes you could be even better off than renting as everyone would get rent assistance as well. Something to nut out.
Rae
24th Apr 2018
1:43pm
Yes OG company and corporate arrangements can get around many obstacles. If they drop that 30% back to 25% forming a corporation will be even more lucrative for high income earners and savers with some investment nous.

The way I'm feeling the sooner none of us pay any more tax for nothing much the better.
Tukkaman
24th Apr 2018
1:13pm
so it gets me thinking thanx to u folk alerting me..... sell the unit & buy home with granny flat with a contrived residual in super at say $450,000 (will now get pension as just on the limit now) plus a cash in hand say for Granny flat.
Go from full draw down on super to maintaining the staus quo...... Jeez it really does make u want to think of the iniquitous state of affairs in not having a universal aged pension.
Rae
24th Apr 2018
1:44pm
Not wrong there and people will do it. It's human nature to get very angry when treated unjustly.
Old Man
24th Apr 2018
2:13pm
Really? Again I claim that this is a misleading article. Of course the concept is correct but, again, we are given no information as to how many aged pensioners have taken up this option. If it is just the odd one or two then that comes under the Kevin "Bloody" Wilson word, DILLIGAF. If it is the thousands then that is a horse of a different colour. Can Olga Galacho give us more information please? Does she know if anyone has done this?
Old Geezer
24th Apr 2018
2:34pm
Well I live in a whole street of houses worth more than $1 million and most are pensioners. There are dozens of streets around here with lots of expensive houses owned by pensioners. Cheapest house would be well over $500,000.
Old Man
24th Apr 2018
2:54pm
Good for you OG, how many of those houses have been bought by aged pensioners upgrading from a cheaper house? After all, that is what this article is about.
Old Geezer
24th Apr 2018
3:06pm
Many of them as a lot of people buy houses around here to retire.
Old Man
24th Apr 2018
3:57pm
So OG, you are saying that you know for sure that "a lot of people" buy houses near where you live solely to get the age pension?
Old Geezer
24th Apr 2018
4:09pm
Why else would they want 5 and 6 bedroom mansions? None are what I'd call suitable for retirement living. Reason they have been coming here is that places like the Gold Coast are getting too busy. You can actually buy a better house for the money in Brisbane than you can around where I live. Know that as I have been helping my on look for houses in Brisbane.
Old Man
24th Apr 2018
4:20pm
So OG, you don't really know whether any people around you have bought houses just to obtain the aged pension. It could be said, using your system of proof, that the pensioners who bought 5 and 6 bedroom mansions were actually downsizing. You see OG, if anyone posts here with ridiculous comments I invariably ask for proof of the statements. I don't mind a robust debate but it's always easier to debate truth rather than supposition and innuendo.
Old Geezer
24th Apr 2018
4:49pm
Downsizing to a 5 or 6 bedroom house I don't think so. Some got caught with the change in the asset test and have been whinging ever since. Others have been doing lots of big renos in the last couple of years and I am getting sick of it all as it's is very disturbing in a quiet neighbourhood. Nearly every neighbour has been on a cruise or an expensive holiday overseas as they tell us when and where they are going. There is always a tip on the latest discount they got as well.

What do you want be to do go and door knock and ask them all if they downsized to keep their pension?
Old Man
24th Apr 2018
5:02pm
Thanks OG for confirming that, in this case, you know 3/4 of 5/8 of bugger all.
Rae
24th Apr 2018
5:24pm
I have a friend who lived on bank dividends and just got fed up. Sold most of the shares and built a million dollar house on the canals in Port Macquarie.

Those canals are full of million+ dollar homes and people getting the OAP.

She couldn't be happier. Kept just enough shares to pay for a couple of trips a year and has a worry free life now.

She just realised how stupid it was to give up close to $30 000 a year, including the concessions etc, all to worry and work her investments.

She's having a great time. Worked hard, lived carefully and saved all her life and is now reaping the rewards.

If the Government think folks will work and save for not much more than the OAP and no support at all they are dreaming.

I know others who needed to divest assets and income to get the health card as they couldn't afford the medication at full price and they could see themselves ending up on the pension when the money was gone anyway. Doing up the house, buying a car and having that trip they always promised they'd have one day and the maximum to get the pension made lots of sense.

The Government is penny wise and pound foolish in my opinion.
Old Man
24th Apr 2018
5:42pm
Thanks Rae, I know the Port Macquarie area very well and you're right about the canals. A lot of those mansions have been bought by sea-changers who have moved up from Sydney. Some of the simple 3BR, fibro and tin homes in Sydney are selling in excess of $1M which allows the owners to purchase in Port and, for the less money, start living on the canals.

I have no problem with people working the system to achieve the best return for their retirement, rules are in place to be adhered to. The thrust of this article is that "everybody" is upsizing merely to get the age pension but no proof is offered. Don't people who have worked hard all their lives and, in some cases, have gone without to help finance their retirement deserve a new car, holiday or improvements to the family home.
VeryCaringBigBear
24th Apr 2018
6:14pm
About 10 years before retirement age I realised I was going to retire with more noney than I needed so I decided that I would help the grandkids buy a house and upside to a much more expensive house for myself. About 5 years before I retired I thought why not retire early and tick of that bucket list so I did. On reaching retirement age I still had too many assets for the old age pension so I doubled the size of my house. Today we get full OAP plus benefits and I estimate I would need close to $2 million to get the income I now enjoy. Not only that my family is happy and content with the grandkids mortgage free.

Upsizing is definitely the way to go.
OnlyGenuineRainey
25th Apr 2018
8:16am
I am shocked at the Grattan Institute wanting to bash anyone with a home worth more than $500,000 That's a disgrace!

Old Man, I agree people who worked hard all their lives and went without to help finance their retirement deserve whatever luxuries they choose, but why are those who choose to delay gratification or leave assets to their children discriminated against while owners of expensive homes and those who lived it up earlier in life are favoured?

The system is WRONG. And sadly the wrongs are being supported by pensioners who are green with envy of folk they THINK might have more than them, and be the wealthy - who don't care about the system at all.

Retirees should be uniting to demand major reform, but sadly there are too many who are utterly selfish and can't think past ''take from him to give me more''.

A universal pension is the right answer, but if that is a bridge too far, then means test INCOME ONLY, including deemed income on ALL assets (yes, including the family home) over a very generous threshold. Those with very lavish homes should then be offered low-cost loans, repayable from their estate on death. That would eliminate the gross unfairness without forcing anyone out of their home.
Rae
25th Apr 2018
11:05am
Why means test income? What about those who handed their super over for an income stream relying on the existing discounts for non concessional contributions? Why do they get shafted?

Talk about being unfair!
OnlyGenuineRainey
25th Apr 2018
12:10pm
Obviously some special provisions would have to apply in some circumstances, Rae. But those with assets would also have their income or deemed income counted.

My preference is always a universal pension. I have just tried to find an interim solution while the nation adjusts to the idea. It seems I omitted consideration of some classes of retirees - certainly not intentionally! My apologies.
MICK
24th Apr 2018
2:47pm
Sounds like another attempt to bring the family home into the assets test. Australians should be tossing out ANY government which tries that on and may wish to look at other first world countries where retirees have not been made a target for a life of thrift and doing without.

The second issue is that author is being a bit naive. Selling an income producing property to buy a bigger house may give you a part pension but why would anyone do this unless they live in a hovel.
Old Geezer
24th Apr 2018
3:09pm
I worked out the other day that a couple would have the same income with $2 million invested as a couple does with $500,000 invested and getting the full OAP without the concessions. So why not put the extra $1.5 million into a better house and get the full OAP?
Rae
24th Apr 2018
5:43pm
Or a house in a better location. perhaps more land in the same location or a lifestyle acreage the grandkids will love to visit and you could build studios all over for them later on.

The other reason is the falling rents and possible housing price collapse. Yields aren't that flash out of Sydney or Melbourne and units are about to flood the market.

A lot of developers and REITS are going to lose capital soon I think. They'll be underwater if they can't sell all those investments and the mums and dads could get stuck too.

We tried divesting a unit near the Brisbane CBD recently, nice unit, bike to the city, above the floodline, small complex with very low corporate body because we no longer needed it for work and wanted to buy a small acreage 20 minutes out from the CBD.

The only bid was 30% less than we paid back in 2007.

Fortunately it doesn't matter and the rent is good although it's 25% less than a few years back.

Come a recession and our kid's can't afford uni with no job prospects and big student debts so they stay home or go home and people lose work all over those investment houses and units had best not cost people everything they own. That would be sad but also very possible.

I agree Og. Regular money with those concessions and discounts sure beats earning $2 million dollars and the work to preserve that sort of money from capital loss. The problem is this neo-liberal experiment with floods of debt making investment so hard and it's getting dangerous out there in the markets now too in my opinion.

Money just ain't what it used to be a decade ago before they printed $600 trillion dollars of debt and derivatives.
MICK
25th Apr 2018
12:02am
Have to agree with the above.
PLEASE NOTE again....other countries have not declared war on retirees and this is not what retirees should have to look forward to in our country. Breadline existence is far removed from an expectation of a enough money to not be doing it too tough.
It would be a far better system if the pension were available to all and tax levied on retirement incomes above a certain amount, Stupidity, jealousy and bloody mindedness removed.

There may be many reasons to leave this country and go elsewhere where incumbent governments are fairer and living costs are much lower. Equatorial countries excluded. Life is so full of choices.
George
25th Apr 2018
12:44am
Agree, MICK, stupid idea to include the family home.

In fact, as in the rest of the civilised world we should have Universal Pension, avoid market distortions, and desperate actions by the aged to survive, and have ".Stupidity, jealousy and bloody mindedness removed" all round.
Jen50
24th Apr 2018
4:08pm
I strongly disagree that the family home should be included in the assets test. What about people like my husband and I who bought a modest house for $10,000 over 50 years ago and now find that our house, through no fault of our own, is worth over a million & could be sold for up to 2 million if the right buyer came along and pulled it down to build a mansion or town houses. We don’t want to sell or move from the suburb we live in because it is close to family, friends, trains, trams, shops and other amenities that we will rely on even more as we get older. Our only income is the aged Pension so we would have to move if our home was included in the assets test.
OnlyGenuineRainey
25th Apr 2018
8:09am
What about people like you? Why should you live off the taxpayer and pass your valuable home to your children while a couple with a $400,000 house and $850,000 in shares is deprived of a pension? I don't think you should have to give up your home, but you SHOULD be supporting deamnds for a fairer system that doesn't discriminate against people with modest homes and savings. The current system is WRONG.
Olga
24th Apr 2018
9:41pm
Oh my lords... you've all got my head spinning. Olga Galacho here. @old geezer, you asked me for more info. Am happy to look into it for you, but can you be specific about what you want to know ... cheers
Olga
24th Apr 2018
9:47pm
Chapesses and Chaps ... if you would like more info re my articles please feel free to email me directly at olga@yourlifechoices.com.au, just in case I miss your questions in Comments on my articles. So many of you have great insights that I can follow up. Talk to me directly so that I can stay on top of the issues that concern you. I deeply appreciate your feedback. Cheers. Olga.
Magic Touch
25th Apr 2018
11:09am
Jen50, You said 50 years ago the house you buy was 10 glen and today you can sell it for 2m. But you know 50 years ago you don,t have water bill to pay only gas& electricity bill also council rate was a small amount plus your house insurance also a small amount to pay. Therefore the wages are all ways enough for paying those bill, transport for pensioner just a dollar. Today your wages it,s not enough to pay all those bills and food .
The goverment it,s setting a trap for you to downsize so you had money in your bank acount then they will ask you to pay back the pension payment then you are on your own. How to play this game it,s not downsize or upsize all you have to do it,s up value. What it,s means up value it,s move to a area which the value of the house worth more money or you can say park your money in the value of your house not in your bank acount then use your house to open a line of cradit for emergency.
Golden Oldie
25th Apr 2018
5:33pm
I upsized my house and downsized my garden a few years ago. The new house I had built cost a lot less than the house I sold. I moved to a different area. My new house is large, but it is more suitable as it is age friendly, open shower recess, open wardrobe, wide passage, tiles in most areas, so suitable if I need a walker or wheelchair. Lost my part pension Jan 2017.
GrayComputing
28th Apr 2018
9:26am
TIME TO GET RID OF ALL THESE STUPID COMPLEX EXPENSIVE RULES
Dear PM MPs and senators

It is time for the government (and for all of us to rant at them) to take action for human decency and a huge stress reduction for pensioners

NO ASSET TEST FOR A PENSION EVERV AGAIN!
A pension is not welfare.

For the retired and retiring people in your electorate do you think they really look forward and want 100++ visits to/from Centrelink and be part of 3 million waiting queues and lost calls?

Most economist say we will save taxpayers money by dropping asset testing because of the massive overheads cost in running Centrelink and the 10,000 conflicting rules
Even poorer New Zealand has a NO ASSET pension so it is cheaper and user friendly,

As an MP do you really like being part of the system that allows this indirect abuse of the elderly?

This abuse is actually sponsored by our government and forced down to Centrelink and borders on a criminal act.

Why do MPs normally compassionate persons let this Centrelink abuse happen at taxpayers’ expense?

As a MP you even stand to lose your chance at being part of the government unless all these criminal asset tests for a pension are dropped now.

NO ASSET TEST FOR A PENSION EVER AGAIN!
Magic Touch
28th Apr 2018
10:22am
Gray Computing you are completely 100 % right. This governer it,s a criminal itself. Pension is not belong to welfare it should be given to the retirees who are shot of income to pay bills, council rate, insurance and foods. No assets test to elderly Australian and no abuse to this elderly by inpost land tax when their income from property is already not enough to make ends meet. This goverment forget that this retirees work their whole life and pay huge amount of tax and can not relex when they retire. The goverment can get monies from many other ways. If they can run Australia properly stept down and give it to others. There are alot of smart Australian who can do it instate of go oversea to look for a better life.


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