The Government’s much-anticipated Retirement Income Review was released late last week.
The final report, more than 600 pages in length, stops short of making any clear recommendations but presents an interesting view of the way we finance retirement.
A range of issues are covered including superannuation, voluntary savings and the Age Pension.
But one of the key sections regards the family home.
Not enough retirees are tapping into the family home
The Review has found that Australians aren’t making the most of their retirement assets.
An unnamed super fund provided data to the panel showing many members who had passed away with as much as 90 percent of their retirement balance.
This is a problem for two reasons:
- It cements wealth inequality between generations
- It lowers the standard of living for retirees
The Review goes on to suggest many Australians would enjoy a more comfortable retirement by accessing the equity on their homes and drawing down on superannuation.
“Home owners also have the opportunity to access the equity in their home to supplement retirement income and manage longevity risk, although few currently do so,” it states.
“If this potential were realised, housing would take on an even more important role in the retirement income system.”
Retirement villages and land lease communities could be a solution
This is where things get interesting.
If staying too long in the family home is the problem, then moving into a retirement village or a land lease community seems like a tailor-made solution.
If you think about it, it makes perfect sense.
Not only are you able to enjoy the same retirement lifestyle (in a significantly more manageable setting), but you’re able to free up capital locked in the family home.
The Government isn’t under the obligation to act on the Review.
But it’s definitely food for thought, and another strong argument for retirement villages and land lease communities.
