Unlocking Equity in Retirement

As Financial Advisers, we provide couples or individuals with strategies to help manage their finances at various stages of life. We are going to start sharing real client stories with you to highlight some of the common pain points we come across. Seeking financial advice can often support you in relieving the ‘pain’. Let’s start with the concept of unlocking equity in retirement.

In a nutshell, unlocking equity essentially means taking advantage of an existing asset you own and turning it into accessible money. The aim of the game is to improve your overall financial situation in a fairly instantaneous way.

The Situation – stuck in a rut!

We’d like you to meet Glenda and Carl**, husband and wife aged 82 and 86. Their large family home had become a physical challenge and growing expense. Super balances were diminishing and cash flow was becoming tight in the current economic market. With rising inflation and cost of living expenses increasing, life felt restricted.

Glenda and Carl came to Goldsworthy Private Wealth for guidance. They knew that selling their home to downsize was part of the solution. However, they weren’t sure how it would affect their Centrelink Age Pension and then there was the question of the released capital. How could it work best for them? This is where professional advice comes into play. To help relieve uncertainty, educate and ultimately improve financial circumstances.

The Solution – Unlocking the Equity

So, selling the large family home and buying a smaller lifestyle village apartment was the first step. Making sure the buying price was less than the sale price, the second. This resulted in an amount of money being “left over” after the move which was then invested into a new superannuation account. We invested these funds in a 50% growth investment profile. This aligned with our clients risk profile with the goal of achieving higher returns than retaining the cash in the bank. This is known as a Downsizer Contribution that can only be done over the age of 55 and within 90 days of receiving the funds.

In addition to this, Glenda and Carl maintained their Centrelink Age Pension payments, but at a reduced amount. The reduction was offset by their ability to now draw a higher income from their new superannuation account. They could breathe easier knowing they had a smaller home to maintain and that it was cheaper to run. The cash flow position improved and that familiar feeling of ‘running out of money’ was reduced.

In Summary

The very act of downsizing your home at the right time is an excellent way to unlock equity. As there are no age limits on making a Downsizer Contribution, clients over the age of 75 can still make use of superannuation for investment purposes.

As you’re reading this, perhaps you or someone you know can relate to the feelings of physical overwhelm and financial anxiety. The type that can sneak up on you in your later years. Just know there are options out there. What you’ll invest in seeking professional financial services, you’ll likely make up for in peace of mind and improved financial stability.

In the long run you are free to live out your retired life exactly how YOU want to.

DISCLAIMER **Clients names have been changed for privacy purposes

Amy Nightingale

Goldsworthy Private Wealth

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