Marguerite Taylor November 18, 2016 No Comments

Reverse Mortgage to Supplement Low Super for Women?

Recent data from Roy Morgan Research reveals that the gender gap between male and female retirement savings is gradually closing. In 2008, the retirement savings of women amounted to 57.7% of the male average, while in 2016 the figure increased to 63%. While this is a remarkable progress, the average superannuation of women may not be enough to sustain a decent lifestyle during retirement.

According to the Workplace Gender Equality Agency (WGEA), there are range of factors contributing to the gender gap in superannuation including:

  • Tax arrangements that benefit higher-paid men
  • Gender pay gap
  • The fact that women take more time off from work to take care of children
  • The fact that women are more likely to work part time

WGEA further reports that the superannuation contribution gap is further compounded by women working part-time (3 out of 4 part-time employees are women) and takes extended periods out of the workforce caring for children and other family members. Hence, more women end up with lower retirement savings.

Australian Women Live Longer then Struggle with their Finances

According to a report released by the Council of Australian Government (COAG) Reform Council, women are generally healthier than men but experience difficulty with their finances, because they less likely to participate in paid work and as we have mentioned above have less superannuation when they retire.

The report also notes that older women (60 years old above) tend to need help with daily activities like household chores and transport. However, almost 30% of senior women report unmet need for help.

By 2050, the number of people aged 65 in Australia will nearly double and those aged over 84 will increase four times. Majority of this population will be women. Senior women don’t necessarily experience difficulty compared to older men, or the other way around, but they have different circumstances. And these unique challenges need innovative solutions like reverse mortgage.

Reverse Mortgage Can Help Women In Retirement

We at RMFS find it unacceptable that Australian senior women have to live with meagre superannuation. That’s why we help our customers, particularly women, to evaluate their finances and find suitable products and services to help them with retirement.

Many senior women have worked hard for years and have already paid off their mortgage. As a matter of fact, working women usually prioritise paying off mortgage first before saving for their retirement. Hence, much of their equity are locked within their homes.

Our reverse mortgage lenders can unlock this equity, so you can use a portion of your wealth to finance your needs during retirement. You can use the loan proceeds in anyway you want such as additional income, debt consolidation, financing aged care, upgrading of home, even purchasing car or paying for holiday.

The best thing about reverse mortgage is that you don’t have to move out from your home, so you can enjoy your residence during your retirement.

To know more about how you can use a reverse mortgage loan, you can call Reverse Mortgage Finance Solutions at 1800 001 020. You can schedule an appointment with our loan experts who will go the extra mile by visiting you at your home.

Regards, Marguerite

Marguerite Taylor April 4, 2016 1 Comment

A call to unlock home equity for a better retirement

Unlocking Housing Wealth—options to meet retirement needs, a report released by the Institute of Actuaries of Australia, recently noted more than $1 trillion of housing wealth owned by Australians who are 65 years old and above. The report is calling on retirees to unlock home equity for a better retirement.

The report also highlights that Australians aged 65 years and above have the second highest ‘relative income poverty rate’ in the Organisation for Economic Co-Operation and Development (when compared to the wealthy countries of the co-operation). We are actually second to Koreans, who have lower relative income poverty rate.

A person falls into ‘relative income poverty’ when they have an income that is lower than the country’s equivalised household median income. Nearly half of Koreans aged over 65 live in relative income poverty, while 36 per cent of Australians share the same problem.

Essentially, this means that most Australian retirees are rich in assets, but poor in income. Accessing the equity in the home is one clever way to beat poverty and live comfortably in retirement, but not many retirees understand the implications, or the benefits. For instance, although the family home is not included in the age pension asset test, but the money received through equity release or downsizing may reduce the aged pension.

It’s understandable that seniors usually want to stay in the family home for as long as they can. Many have the age pension in mind with regard to this. Another consideration is often the children, who want to maximise their inheritance by keeping the family home. Anecdotally it appears that – at least in a significant minority of cases – the family’s decision in terms of what to do with the family home is driven by self-interest. Sometimes even if the children know that selling the home would mean a better quality of aged care for their parents, they are still reluctant. (There are also instances of “elder abuse” where the adult children put pressure on elderly parents for a financial outcome that is beneficial to them).

An ongoing tradition of “if-you-take-care-of-me-you’ll-get-the-house” mentality has also plagued many Australian families. Some children see caring for their parents as a form of unpaid labour and thus, expect more in return. This is pretty common and although there’s no formal contract between them, this arrangement can work better for many than having the elderly ‘buy in’ services from outside providers.

However both parents and children can obtain a better standard of living if the penalties inherent in selling the family home are removed, according to Catherine Nance of PWC. Past tax policies that helped previous generations save for their home have been very effective, but the problem is that these same assets are now ‘illiquid’ and difficult to access – except with a reverse mortgage.

The report by the Institute of Actuaries of Australia concludes that changes to the age pension asset test and relief from stamp duty would generally help retirees by making ‘unlocking home equity’ more accessible. In the meantime, reverse mortgage remains one of the best mechanisms currently available to easily release some of the $1 trillion house wealth owned by Australians 65 years or older.

Regards, Marguerite