In this episode, we explore what home really means in later life — when freedom, lifestyle, and financial reality start pulling in different directions.
A couple of areas to think about if you do downsize is the impact on the age pension.
Especially if you are in receipt of it
Recapping:
If you are in receipt of the age pension and you downsize you may increase your assessable assets that Centrelink assess - this may impact the amount of age pension you receive.
For example a single retiree on the Full aged pension (approx 30K pa) with less $314K assessable assets receives the full age pension. Should they downsize and free up 200K, their assessable assets are now 514K - their age pension entitlement may fall by $15,900, so they now only receive $14,100 pa. By waiting another few years to do the down-size (and drawing down on assessable assets) you may be able to keep assets below $314K once have completed downsize and still be entitled to the full age pension
Alternatively, if you need to down-size due to needing more income - you could consider the Government pension loan scheme as an alternative to down-size.
There is no financial gain for us to downsize and still be able to afford to live in our area. We have a four bedroom house that we have made accessible as we age. Alternatives such as renting out a room without a penalty re calculation of PPOR value, or more generous allowance for how ‘board’ or rent is calculated for non-family members when applying for Centrelink might help more of us to open those bedrooms to older Australians in a tenuous rental situation. We will need to have the pension as one of our income streams down the track but current settings would disadvantage us if we rent out a room now.
Timely as I need to make a decision about downsizing this year. However, few alternatives in our price range, unless we leave the city and community. So any long term benefits of downsizing, beyond the financial are not yet obvious to me.
It would re helpful if they changed the 10year time you have to have lived in your house before using the downsizer contribution.
People over 60 can have sudden health issues that require a quick decision to change your housing.
Hi Great Podcast.
A couple of areas to think about if you do downsize is the impact on the age pension.
Especially if you are in receipt of it
Recapping:
If you are in receipt of the age pension and you downsize you may increase your assessable assets that Centrelink assess - this may impact the amount of age pension you receive.
For example a single retiree on the Full aged pension (approx 30K pa) with less $314K assessable assets receives the full age pension. Should they downsize and free up 200K, their assessable assets are now 514K - their age pension entitlement may fall by $15,900, so they now only receive $14,100 pa. By waiting another few years to do the down-size (and drawing down on assessable assets) you may be able to keep assets below $314K once have completed downsize and still be entitled to the full age pension
Alternatively, if you need to down-size due to needing more income - you could consider the Government pension loan scheme as an alternative to down-size.
https://www.servicesaustralia.gov.au/home-equity-access-scheme
Cheers
There is no financial gain for us to downsize and still be able to afford to live in our area. We have a four bedroom house that we have made accessible as we age. Alternatives such as renting out a room without a penalty re calculation of PPOR value, or more generous allowance for how ‘board’ or rent is calculated for non-family members when applying for Centrelink might help more of us to open those bedrooms to older Australians in a tenuous rental situation. We will need to have the pension as one of our income streams down the track but current settings would disadvantage us if we rent out a room now.
Timely as I need to make a decision about downsizing this year. However, few alternatives in our price range, unless we leave the city and community. So any long term benefits of downsizing, beyond the financial are not yet obvious to me.