Using the family home for sustainable retirement income

03 November 2016

As discussed in a recent article in the Financial Review, it is increasingly clear that superannuation alone cannot support one’s retirement needs, especially aged care funding.

Changes to the asset test for the aged pension and aged care entitlements on 1 January 2017 are in line with the Government’s Aged Care Roadmap which will see more retirees having to fund their care if they are able to.

According to recent research by the Committee For Sustainable Retirement Incomes (CSRI), many will not have enough savings even under a mature superannuation system to afford their aged care costs. As a result, these future retirees are projected to have a retirement income that is below the comfortable level. A majority of current workers with full-time incomes would need to make significant voluntary contributions in order to enjoy a comfortable lifestyle in retirement – something that’s just not happening at the moment.

Committee For Sustainable Retirement Incomes (CSRI) Research

High Quality Problem

Australia’s ageing population and increasing life expectancy give us more reason to view the retirement income system differently. Each day there are 700 Australians who are turning 65 years old*. It is also expected that by 2055, our women will live up to 97 years old and men will enjoy a life expectancy of 95 years**. Indeed, Australian citizens are predicted to have among the highest future life expectancy in the world.

This is good news, but these factors will lead to rising cost of aged care and more people needing aged care. Increasingly Australians will need to be more effective in managing income and maximising household assets to enjoy a good living standard in retirement years. Australians have more wealth tied up in their family homes than other assets. Consequently, we believe that information and support should be available for them in order to access the equity in their homes.

At present, the Reverse Mortgage industry still has some work to do in order to in order to make equity release more easily accessible by older homeowners. Current obstacles include a lack of public awareness about the options available, and misconceptions around how Reverse Mortgages work.

Here at Heartland we’re doing our part to remove these obstacles. We’ve recently developed and released an animated ‘explainer video’ to better educate and inform the community about solutions the humble family home offers. Shortly we’ll also be releasing a series of filmed videos that further address the seemingly intractable problem of retirement funding.

At Heartland, we see housing as being the fourth pillar of the retirement income system, and believe that only in using residential property as another retirement funding option are we likely to develop a truly sustainable system for retirement income for Australians seniors now and into the future.


You’re living longer… how’s Australia going to pay for it? 

Speech by Brian Benari, 19 May 2016, Managing Director and Chief Executive Officer, Challenger Limited

**2015 Intergenerational Report: Chapter 1 – How will Australia change over next 40 years?

The Australian Treasury


Information provided is accurate as at 03 November 2016 and may change from time to time