Rush for seniors to downsize not the right step
Any recommendations to include the family home in the Aged Pension asset test is bullying, according to Money Quest.
The Mortgage Broker said while seniors were placing a heavy strain on the Aged Pension system, those who are asset rich, income poor have fundamentally done nothing wrong but raise families, educate their children, pay taxes, and contribute to the nation's economic strength and cultural diversity.
Money Quest chief executive, Michael Russell, said "any recommendation to include the family home, such as that by The Actuaries Institute in their September 2015 report titled, ‘For Richer, For Poorer', is tantamount to bullying. The big stick approach is an appalling way to deal with seniors and should not be tolerated".
"While the carrot must always be the only option when dealing with seniors, the Federal Government's present thinking to give retirees who downsize a one-off exemption from stamp duty and then quarantine the sale proceeds of their family home, is the preferred approach — providing of course we should in fact be incentivising them to downsize in the first place," he said.
"This to me is the real issue and I don't believe it has commanded enough consideration."
Russell said while it seemed seniors were being hurried to downsize, their quality of life and sale proceeds of their home would not manifest into something contributory.
"Firstly, the notion that housing supply will be enhanced to improve affordability with seniors downsizing is fundamentally flawed," Russell said.
"To be encouraging seniors to prematurely downsize in a hot housing market and then compete head on with first home buyers and investors for much sought after property, can only lead to a further imbalance in the market."
Russell also said there was research that suggest a senior's quality of life and longevity was enhanced while remaining in the family home for as long as it was practical.
"To this end, MoneyQuest is unashamed of its support for reverse mortgages to assist ‘asset rich, income poor' seniors to unlock the equity in their home and truly improve their quality of life," he said.
Russell said there was also little evidence to suggest that downsizing surpluses will manifest into strengthening our national GDP.
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