Read this article and then send it to your Financial Planner.
Most people who rely on investments for their retirement income suffer from varying levels of investment returns, resulting in fluctuating levels of income.
For example, a couple with $30,000 in the bank and $600,000 invested in Australian Shares may have earnt $118,200 in 2013 and seen that figure plunge to $22,800 in 2015! (All Ordinaries Index yearly return – 2013 Av. 19.7% – 2015 Av 3.8%– source *Market Index Australian Sharemarket Historical Returns Report).
That same couple will also experience a significant reduction in the part pension eligibility as a result of the changes to the Pension Asset Thresholds, effective 01/01/2017.
An easy way for investors to maintain a constant level of income during their retirement is to establish a Stand-By Reverse Mortgage loan. In the above example the average annual return on Australian shares in 2013 was 19.7% whilst in 2015, it was only 3.8%
By using a Stand-By Reverse Mortgage loan, you and your Financial Planner can identify a minimum level of return you need to maintain your lifestyle. For example, if the above couple established 7% p.a. as a minimum level of return, this equates to an income of $42,000 p.a.
In the 2015 year, they would have earned $22,800.00 – a shortfall of $19,200! Using a Stand-By Reverse Mortgage loan, they would have drawn this amount from their Stand-By Reverse Mortgage loan.
In the 2013 year, they would have earned $118,200. They would have retained their $42,000 annual income and paid the balance into their Stand-By Reverse Mortgage loan, to offset any amounts drawn in previous years. Because 2013 was such a strong year, they may have drawn some of the surplus funds and gone on a trip or upgraded their car etc.
The Stand-By Reverse Mortgage loan can be drawn against at any time, for any purpose and repayments of any amount can be made at any time, without penalty.
These features make it an excellent tool for retirees to have in the background of their retirement strategy, to make up any shortfall in annual investment incomes and also, to replace the need for them to maintain large cash reserves.
Reverse Mortgage Finance Solutions are specialist Equity Release Credit Advisors and can assist your Financial Planner to establish a Stand-By Reverse Mortgage loan to underwrite your annual income levels and provide access to extra cash, as and when required.
Go to our web-site for contact details for your local, State based advisor. www.reversemortgagefinancesolutions.com.au or contact us on 1800 001 020
*Historical returns are based on the All Ordinaries Accumulation Index (XAOA) which includes dividends
Peter Bolitho. Director – Seniors Equity Release Australia; Reverse Mortgage Credit Advisor.