Homesafe Solutions Managing Director, Peter Szabo said that astute financial planners have long recognized that the family home represented a massive part of the wealth of senior Australians. Now it is even more important for all financial planners to recognize the importance of the family home by taking a total asset approach to financial planning.
Accessing the wealth tied up in the family home will now be one of the challenges facing seniors. Peter Szabo, an actuary, pointed to the recent Actuaries Institute report that came about from two studies; one from actuaries, Plan for Life and the other from the CSIRO, that highlighted the very conservative financial approach retirees have adopted in order to stretch their superannuation balances as far as possible.
“Irrespective of how diligently and conservatively retirees manage their finances, the reality is that some are heading towards an outcome in which superannuation balances and savings nest eggs will run out long before death – as a result they will have no option but either to access the wealth tied up in the family home or government for assistance via the Age Pension and related services for their remaining years”, said Peter Szabo.
Although the Actuaries Institute report did much to highlight the problem and causes it did not provide answers and solutions for mature age Australians about to leave the workforce, nor for seniors in retirement.
“With so many seniors unprepared for retirement and uncertain about their future financial prospects, seniors need to broaden their horizons and consider options beyond superannuation, savings and the Age Pension”, said Peter Szabo.
There are much better and more dignified options for seniors than a subsistence existence in retirement living on the barest of incomes or from one Age Pension payment to the next.
In this environment, the family home and its stored untapped wealth has emerged as an unexpected final lifesaver to fund income savings gaps for retirees.
Unfortunately, as the result of deep emotional attachments, the family home continues to be the elephant in the room and is often deliberately omitted from the mix in a total assets approach to securing a more financially secure life in retirement.
Peter Szabo concluded, “With strong house price appreciation in recent years rendering the home a substantial asset for many senior Australians, the wealth tied up in the family home is too important an asset not to be included in a total asset approach to long term financial sustainability.
“Accessing the store of value in the family home via Homesafe’s equity release offering is one option that could assist a retiree with a broader and deeper pool of funds for the purpose of wealth creation or as an option to a slow and steady depletion of superannuation and savings”.
