19th of April 2016
Better options often overlooked by retirees that downsize in haste says Homesafe
MEDIA RELEASE – 19 April 2016
Since the release of Australian Government Productivity Commission Research Paper ‘Housing Decisions for Older Australians’ in December 2015 and the more recent Actuaries Institute green paper ‘Unlocking Housing Wealth’ the spotlight is well and truly on the issue of funding the nation’s ageing population now and in the future said Homesafe Solutions MD and Founder Mr Peter Szabo.
However, many of the issues faced by Australian retirees and the social, personal and financial ramifications of some suggested solutions need to be considered very carefully.
One high profile issue that has emerged is the realisation that on leaving the workforce, many Australian retirees will have most of their wealth tied up in the family home. The balance of wealth will be comprised of insufficient savings and superannuation that will fall far short of the funds required to maintain a comfortable and dignified life in retirement said Peter Szabo.
“Another reality is that many will enter retirement with a mortgage over the family home that will be required to be serviced without the benefit of a salary or wage – or in the worst case scenarios asked to be repaid in full by the lender”.
“Seeing the value of their homes steadily rising over recent years, many will be tempted to succumb to the urge to sell the home and downsize to more ‘modest’ accommodation”.
“Unfortunately many have realised that the decision to sell the family home in order to access the equity, retire debt and fund the retirement savings gap was made in haste and will not deliver the desired financial and social outcomes”.
Those that downsize are usually overly optimistic, want the new property to be within close proximity to the CBD with two and three bedrooms in the new home or apartment to accommodate family, friends and grandchildren when they visit.
As well as being scarce, downsizers soon realise this can be a very expensive undertaking when transaction costs such as legal fees, stamp duty, moving charges, storage, etc. are factored in.
Peter Szabo continued, “There are far better and more appropriate alternatives to downsizing for seniors that allows access to the equity in the family home to fund a comfortable and dignified retirement.
“Homesafe’s equity release offering is one such option that allows retirees to live in the comfort of their home in a familiar and secure environment surrounded by friends, family and community in which they have lived for many years”.
Homesafe Wealth Release commenced operations in 2005 and is still the only debt free option available in the equity release marketplace by providing senior homeowners an option that allows them to live in their home by selling a share of the future sale proceeds of their property (that is fully protected) for an immediate cash sum.
There are no repayments and the senior homeowner has the certainty that they will always retain their share of the sale proceeds.
Peter Szabo concluded, “When it comes to downsizing and relocating to a new home, the process can be emotionally exhausting for retirees seeking a solution to address their retirement financial gap.
“Furthermore as retirees age, illness or death of a spouse amplifies stress, especially if residing in a strange and unfamiliar area with no long standing links and reassuring attachments to neighbours, friends and family.
“All very important factors that must be considered carefully before deciding to downsize, especially when Homesafe’s equity release offering can provide both a financial solution and peace of mind”.