Be careful when selling family home
The family home is an untapped source of equity for those who may be adversely affected by the new Age Pension assets test but seniors should give due consideration to the implications of such a decision, according to Homesafe Solutions.
Managing director, Pete Szabo, said a number of pensioners may yield to the temptation of selling their home or downsizing as they faced the prospect of losing their pension or receiving a reduced amount.
However, he warned that pensioners should consider the emotional consequences of downsizing including moving to an unfamiliar neighbourhood where they no longer had their familiar social networks.
While home owning seniors could benefit from significant appreciation of residential property values, especially Sydney and Melbourne, they should also consider the fact that downsized homes or apartments may not be able to accommodate visits from family and grandchildren, or all of their collectables.
"It is for all these reasons that seniors need to consider with great care any decisions they make and ensure that they do not forget the role that home equity can have in securing their financial future," Szabo said.
Szabo said over 300,000 pensioners would have reduced entitlements, with as many as 100,000 losing all entitlements by 1 January, 2017.
AUTHOR
Malavika Santhebennur
Recommended for you
A financial advice firm has been penalised $11 million in the Federal Court for providing ‘cookie cutter advice’ to its clients and breaching conflicted remuneration rules.
Insignia Financial has experienced total quarterly net outflows of $1.8 billion as a result of client rebalancing, while its multi-asset flows halved from the prior quarter.
Prime Financial is looking to shed its “sleeping giant” reputation with larger M&A transactions going forward, having agreed to acquire research firm Lincoln Indicators.
An affiliate of Pinnacle Investment Management has expanded its reach with a London office as the fund manager seeks to grow its overseas distribution into the UK and Europe.
