It is a bit of a pain having all your assets trapped in your house when you retire. If you need to downsize for cash, you can't downsize too much, and you need to do it frequently. Who wants to keep moving to a slightly smaller home when they're old? Besides, with stamp duty it's hardly effecient. There should be a better way to do this - like stick the excess cash in super fund.
In some cultures, all your assets are trapped in your kids. And in some of those circumstances, those assets are lost forever in an instant.
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
so if i have a ppor I'm allowed 186k of other assets before my pension is effected. if i don't have a house I'm allowed 321k before my pension is reduced. so if i save money and are a renter pensioner rather than a pensioner buyer, I'm screwed by the system.
centrelink needs to value a house at more than 135k
your home shouldn't be means tested at all. so what if it's worth 1mil, until you turn it into cash doesn't do you a lick of good in retirement.
I bet when you purchased it it wasn't worth 1mil. having to sell the family home to retire is a bloody outrage.
I am the love child of Tony Abbott and Pauline Hanson
I think that this has been true in the past, but whether it remains true will depend upon what policies are put in place. EG I understand that in Germany the aged pension doesn't get paid until you have sold your home and used up most of your own savings, therefore what's the point of owning your own apartment?
Trying to second guess what a future government may do is tricky, but as it stands home ownership should have the benefit of saving the future impost of rent because the government here is pro home ownership.
If someone chose to accumulate savings instead of buying a home, they are then subject to a means test when they apply for an aged pension that a home owner with equal wealth isn't subject to.
In every game you just have to know the rules and use them to your advantage.
I'd truly hate to be a marginal self-funded retiree in Australia in the next 20 years, i.e. one who has led a relatively virtuous life at median income, ending up with a middling net worth of $500K - $1.0M (2012 dollars), much of it locked up in a house.
In that position, one wouldn't be rich enough to expect that the cash part of the retirement stash would be sustainable--without government assistance--at some comfortable level through to burial, nor poor enough to be (relatively) thankful for anything the government provides.
At the state level, retirees emotionally brave enough to look at a rational decision to downsize the family home, e.g. due to excess space, high maintenance, lack of handicapped-access facilities, or bereavement-related downsizing needs, would run headlong into punishing state stamp duty regimes, unsoftened by subsidies aimed at FHBs.
Federally, one would look forward with dread to every federal budget speech (and mid-year course correction), waiting for a fresh round of unwanted government tinkering with means tests and asset limits (and professional help to prove these), progressively limiting access to the age pension, medical benefits, and retirement home options.
Right now, net worth tied up in a house is relatively sequestered from asset tests, but how long will that last as the Boomer retirement wave puts more and more pressure on government expenditures on the oldies???
I don't doubt that a O/O real estate asset has a advantaged position today, in a recent retiree's asset portfolio. The question is whether that status will last in Australia over the remaining lifespan of the retiree, given predictable demographically-driven negative pressures on future Australian government budgets. And if it doesn't, what will it cost to get out...?
"In every game you just have to know the rules and use them to your advantage."
I don't mind putting that challenge on a freshly-retired person in their 60's--for at least a brief period, s/he can return to work if the sums are wrong. But I wouldn't think much of a society that keeps changing the rules for those well past any significant capacity for economic adjustment.
No one wants to suffer through old age. Home ownership provides some security and definite benefits for retirees.
This is one fundamental reason why we should encourage people to embrace home ownership.
I agree with you NF, once your accommodation is taken care of you can live very cheaply indeed. But if I was starting out right now I'd be holding off on any purchase because the dream of home ownership is becoming cheaper by the day.
In some cultures, all your assets are trapped in your kids. And in some of those circumstances, those assets are lost forever in an instant.
But we're not talking about "cultures", we're talking about the nation of Australia, currently one of the richest per capita countries of the world.
Economically, an Australian's assets (and potential for a decent retirement) aren't "trapped in your kids", or "lost forever" if one should suffer the extreme misfortune to lose a child. And that is (or should be) true no matter what one's cultural background is, as an Australian.
No one wants to suffer through old age. Home ownership provides some security and definite benefits for retirees.
This is one fundamental reason why we should encourage people to embrace home ownership.
Quote:
Buy your own home or risk living an impoverished old age
I remember these words resonating in the USA during early 2000s.
Now just few years later situation is quite different: people who bought at that time are paying almost everything they have to repay huge mortgages. They are failing to save for old age while people who rented and waited have the opportunity of the lifetime to buy with 50% discount and the record low 30year fixed interest rates and save the rest for comfortable and early retirement.
The question was never: to buy or not. The question is when to buy (now or later).
RE spruikers like you are presenting false dilemma that if somebody doesn't buy now - at the peak of the bubble will die homeless. While in fact dilemma is whether to jump into life time debt slavery or wait for things to return to normal.
Someone who decides to wait a couple of years for price to fall will not die homeless even if prices do not crash, but they are likely to get deal of the life time.
It would be good to see wealth comparison between people who bought during bubble periods and people who bought after bubbles.
But I wouldn't think much of a society that keeps changing the rules for those well past any significant capacity for economic adjustment.
Imo this will be a good thing, we can't have oldies living in houses that are needed by youngens in order to bring up the next generation. They should either save and be responsible so they can live in our main capitals when they are old or fuck off and go and live up the coast somewhere and free up the houses for youngens.
Old people have been quite happy to fuck over youngens with nimbyism and globalisation/immigration. They're not some innocent and honourable people.
stinkbug omosessuale Frank Castle is a liar and a criminal. He will often deliberately take people out of context and use straw man arguments. Frank finally and unintentionally gives it up and admits he got where he is, primarily via dumb luck! See here Property will be 50-70% off by 2016.
I remember these words resonating in the USA during early 2000s.
Now just few years later situation is quite different: people who bought at that time are paying almost everything they have to repay huge mortgages. They are failing to save for old age while people who rented and waited have the opportunity of the lifetime to buy with 50% discount and the record low 30year fixed interest rates and save the rest for comfortable and early retirement.
The question was never: to buy or not. The question is when to buy (now or later).
RE spruikers like you are presenting false dilemma that if somebody doesn't buy now - at the peak of the bubble will die homeless. While in fact dilemma is whether to jump into life time debt slavery or wait for things to return to normal.
Someone who decides to wait a couple of years for price to fall will not die homeless even if prices do not crash, but they are likely to get deal of the life time.
It would be good to see wealth comparison between people who bought during bubble periods and people who bought after bubbles.
Perfect.
This is how we have done it. I've worked in Ireland, US, Germany, France and now Australia. What I've noticed is the cycle. Sometimes it takes 9-11 years. Sometimes 18-25 years. With inflation under control and credit available to whoever wants to sign their name somewhere in the cycle the cycle just repeats itself in every country, well not in Germany. We noticed when you are ready to buy there is always a nice place waiting for you value and stabilized sector. All the others just play the game wait for two year after a fall to make sure it's stable and buy. House value 3-4x your income, 33% loan repayment at 10% interest, 20% deposit, a rough guide but always always works. But usually you can see a crash because the newspapers scream it. Just the way the game is played and too many people just walk into a bank, get as much as they can, walk out, give it all to a builder/agent and say give me a house. No concept of value or research and its these ones who are stuck with the debt. Ask anyone 50 or older and most will tell you the same thing. That they either got lucky because the market crashed when they were ready to buy or that the first place they bought was at the peak of a boom and they learned their lesson. Some learn some don't some have just a house when they retire some have the world. It's not hard just don't ever trust anyone but yourself in making the decision
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