Key Points
Report calls for a rethink on the home from a “nest egg” to a key financial asset to boost retirement income.
It also wants the family home to be included in the Age Pension means test.
³Ô¹ÏÍøÕ¾ Seniors opposes this and says a universal pension would better support retirees.
Could the family home be the “secret” to making housing more available for families while fuelling a wealthier retirement for struggling retirees?
That’s the essence of a dialogue paper by the Actuaries Institute – More Than Just a Roof: Changing the Narrative on the Role of the ³Ô¹ÏÍøÕ¾ – which calls for a rethink on how the home is traditionally viewed, changing from a “nest egg” to a key financial asset retirees can use as an income stream in retirement.
Downsizing or reverse mortgaging the family home as a source of income for asset rich but cash poor retirees is not a new idea. However, this report goes further by asserting retirees have too much money tied up in housing and governments should encourage them to divest through carrot-and-stick policies, including means testing.
The paper says more than 80% of Australians aged 65 to 74 live in their own home, with retirees holding an estimated $1.3 trillion worth of housing equity. However, many do not view their home as a financial asset that could be more actively managed beyond potentially helping to pay for future aged care costs and as a bequest.
“If retirees accessed 20% of the $1.3 trillion they hold in home equity, it would unlock about $260 billion to help fund what could be 25 to 30 years or more in retirement,” paper author and actuary Andrew Boal said.
Most recommendations are aligned with ³Ô¹ÏÍøÕ¾ Seniors’ long-standing advocacy for practical policy measures to enable seniors to downsize, without affecting Age Pension payments.
