Retirement
Housing downsizing incentives: Are they worth it?
The federal budget’s concessions for retirees choosing to downsize their home, while potentially beneficial, may not be the best option for all Australians, an expert has cautioned.
Housing downsizing incentives: Are they worth it?
The federal budget’s concessions for retirees choosing to downsize their home, while potentially beneficial, may not be the best option for all Australians, an expert has cautioned.
HLB Mann Judd’s wealth management partner Jonathan Philpot says the ability to add $300,000 from the sale of your home into your superannuation, as outlined in the recent budget, could leave some retirees worse off financially.
“The government has proposed that retirees will be able to put an extra $300,000 into super from the proceeds of selling their family home after they turn 65. For a couple, it means being able to contribute a further $600,000 to their super,” Mr Philpot said.
“This strategy may not suit everyone and people should fully investigate the implications it may have on areas such as the age pension before taking action.”
One of Mr Philpott’s prime concerns is that family homes are not part of the age pension asset test, where superannuation balances are.
“With the new assets test taper rate of $3 a fortnight for every $1,000 of assets, this works out as a reduction in pension payments of $78 in pension payments for every $1,000 now included in the assets test,” he said.
For a couple with $500,000 in assets that count towards the age pension as well as their own home, putting an additional $300,000 into super through the sale of their house would reduce their age pension by $23,400 a year, Mr Philpot said.
“This means they have to invest the $300,000 and produce an after-tax return of greater than 7.8 per cent a year in order to be ahead of the current position, not an easy task in today’s environment.”
For retirees who already have assets above the threshold, however, the new incentive would allow them to “further increase their wealth in super” and could prove beneficial, Mr Philpot said.
“Overall, it is a positive move for many people who are over 65 and [are] no longer able to contribute any more into super,” he said.
“This could include those who do not pass the work test, this would be the majority, or who have total super balance above $1.6 million – this would be the minority. A couple with accumulated assets outside of their home of greater than $821,000, or a single person with more than $546,000, may benefit from these changes.”
RELATED ARTICLES
Retirement Planning
New Framework Aims to Bridge Australia’s Financial Advice Gap
A ground-breaking framework introduced by the Actuaries Institute promises to revolutionise how Australians access financial support, potentially transforming the financial wellbeing of millionsRead more
Retirement Planning
The downsizer dividend: how Australia’s ageing shift will reshape property, finance and AI strategy
Downsizing is moving from a personal milestone to a system-level lever for Australia’s housing market. As policymakers court reforms and agents eye fresh listings, the real profit pools will accrue to ...Read more
Retirement Planning
Half of Australians financially insecure about retirement as AMP launches new initiative
In a significant move aimed at addressing the retirement concerns of Australians, AMP has unveiled the Retirement Confidence Pulse, a national barometer designed to gauge the financial confidence of ...Read more
Retirement Planning
North introduces Grow to expand Australia's financial advice footprint
In a bid to bridge the gap between the demand for financial advice and its accessibility, North, a prominent platform for superannuation and retirement in Australia, has launched an innovative ...Read more
Retirement Planning
Majority of Australians anxious about retirement as super knowledge gaps persist, report finds
A new study by Aware Super has revealed that a significant majority of Australians aged 45 and over are feeling anxious about retirement, with nearly nine in ten respondents concerned they will run ...Read more
Retirement Planning
AMP’s MyNorth Lifetime boosts financial security and retirement income
AMP has reported that its MyNorth Lifetime retirement income solution is delivering significant financial benefits to retirees, with an average uplift of 50% in total income. Read more
Retirement Planning
Retirement living sector calls for planning reforms amid declining construction confidence
The Retirement Living Council (RLC) is urging governments to streamline planning systems to boost housing supply, following a decline in confidence in age-friendly construction activity. Read more
Retirement Planning
New laws to boost women's retirement savings through paid parental leave
The Australian Parliament has passed new legislation that will see superannuation guarantee contributions paid on the Commonwealth Government's Paid Parental Leave (PPL) scheme. Read more
Retirement Planning
New Framework Aims to Bridge Australia’s Financial Advice Gap
A ground-breaking framework introduced by the Actuaries Institute promises to revolutionise how Australians access financial support, potentially transforming the financial wellbeing of millionsRead more
Retirement Planning
The downsizer dividend: how Australia’s ageing shift will reshape property, finance and AI strategy
Downsizing is moving from a personal milestone to a system-level lever for Australia’s housing market. As policymakers court reforms and agents eye fresh listings, the real profit pools will accrue to ...Read more
Retirement Planning
Half of Australians financially insecure about retirement as AMP launches new initiative
In a significant move aimed at addressing the retirement concerns of Australians, AMP has unveiled the Retirement Confidence Pulse, a national barometer designed to gauge the financial confidence of ...Read more
Retirement Planning
North introduces Grow to expand Australia's financial advice footprint
In a bid to bridge the gap between the demand for financial advice and its accessibility, North, a prominent platform for superannuation and retirement in Australia, has launched an innovative ...Read more
Retirement Planning
Majority of Australians anxious about retirement as super knowledge gaps persist, report finds
A new study by Aware Super has revealed that a significant majority of Australians aged 45 and over are feeling anxious about retirement, with nearly nine in ten respondents concerned they will run ...Read more
Retirement Planning
AMP’s MyNorth Lifetime boosts financial security and retirement income
AMP has reported that its MyNorth Lifetime retirement income solution is delivering significant financial benefits to retirees, with an average uplift of 50% in total income. Read more
Retirement Planning
Retirement living sector calls for planning reforms amid declining construction confidence
The Retirement Living Council (RLC) is urging governments to streamline planning systems to boost housing supply, following a decline in confidence in age-friendly construction activity. Read more
Retirement Planning
New laws to boost women's retirement savings through paid parental leave
The Australian Parliament has passed new legislation that will see superannuation guarantee contributions paid on the Commonwealth Government's Paid Parental Leave (PPL) scheme. Read more
