Worried about how downsizing might affect your pension?

Would you downsize to a smaller home if you didn’t have to worry about how it might effect your eligibility for the pension and other payments? 

Well new research out today from the National Seniors Productive Ageing Centre says that 30 percent of all seniors were considering downsizing their home.  And when we consider that there is 4.57 million people over 60 in the country, that could add up to being ohh, a cool 1.25+ million people!  Not many really! 

The research said that the cost of staying in your family home and the labour that it takes to keep up with it, are two significantly influential factors in the choice to downsize.  And I know this was certainly the case for my inlaws, who only two years ago, at the age of 62, downsized from a large family house to an apartment near the beach.

Mary Wood, the Executive Director of the Retirement Living Council said that “Thirty per cent of seniors surveyed stated they were considering moving to a smaller place – but many are unable to, due to barriers put in place by governments.”

The Government scrapped the Housing Help for Seniors Program in the Federal Budget that was supporting many pension aged people to downsize without penalising them for freeing up their capital.

“While a minority of people (28 per cent) stated they would have been influenced to downsize by the proposed Housing Help for Seniors pilot scheme, which was scrapped in the Federal Budget, this still represents a very significant segment of the senior population – around one million people”, said Ms Wood.

“We are in support of the principle that there should be able to downside without penalty to their asset test,” she said.

Seniors over age pension age who have lived in and owned their home for more than 25 years, were offered, under the scheme that they could downsize to a home of lesser value, and be able to place at least 80 per cent of the excess sale proceeds (to a cap of $200,000) from the sale of their former home into a special account.

This special account was to be exempt from the pension income and assets tests for up to 10 years, or until a withdrawal is made from the account, whichever occurs first.

The program drew great support from retirement housing sectors who were seen as the winners from the program.  But the pilot, which never formally commenced has been stopped dead in its tracks, to the horror of many in the retirement living industry, and the concern of many pensioners.

Tell us how you feel about downsizing in the polls below and in the comments below… Share your concerns!

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