Over 60? Unemployed? You may be able to retire now

Over 60? Unemployed? You may be able to retire now

An increasing number of older Australians are facing long-term unemployment with the situation likely to become even worse as a result of the COVID-19 pandemic.

Australians aged 55 to 64 make up the highest percentage of unemployed workers, and they remain on Newstart for longer than any other age group (up to 188 weeks compared to 162 weeks for all Newstart recipients).

According to a recent government report, age discrimination was endemic in Australian society and a common barrier to employment.[1]

Frances, a 64-year-old unemployed woman, told the inquiry that she believed she was being denied the opportunity to work primarily due to her age. “I am currently unemployed as all attempts to gain employment in my area of expertise have been fruitless. Attempts to gain employment in other areas have also been fruitless,” she said.

The inquiry also found the situation was even worse for older women who increasingly faced financial insecurity and were forced to rely on income support payments.

Women faced additional challenges financially as a result of separation and divorce, the gender pay gap, years of unpaid caring and the superannuation gap.

Long waiting times to qualify for income support are also not helping, with many older Australians seeking work forced to deplete their modest savings just to get by.

And it is not the super wealthy retirees that are affected. A single person only needs to have $5,000 in the bank or in shares to incur a waiting period of up to 13 weeks before receiving income support. This may now be increased to up to 26 weeks under proposed new legislative changes, the report said.

For the vast majority of older Australians, their home is by far their most valuable asset and there is often little or no savings, investments or even superannuation to rely on.

And while the family home is not asset tested for income support including for the Age Pension, it can provide a valuable source of funding to over 60s in times of need.

Smooth Retirement CEO and Managing Director Scott Phillips said using some home equity to create a source of income was a viable and sensible solution for many asset-rich, cash poor Australians, particularly those yet to access their super or the Age Pension.

“If you’ve found yourself unemployed, without many cash reserves or are unable to access your super or the pension yet, you may wish to consider supplementing your income with a reverse mortgage,” Mr Phillips said.

“With proper planning and the right advice, reverse mortgages can be an effective means of providing an income stream, a lump sum of capital or refinancing existing debt, without the need to sell your home.

If you are over 60 and own, or mostly own your home, you may be able to access a portion of your home equity so you can live comfortably until you are able to access other income via super or a government pension.

Depending on your situation, you can also use a reverse mortgage to top up your account-based pension drawings or your Age Pension so you have a little bit more to live on each month. You may even be able to retire early if you need or want to stop working sooner.”

“As with all financial decisions, it is recommended that you seek independent professional advice before entering into any agreement,” Mr Phillips said.

Smooth Retirement are retirement income specialists and licensed equity release planners and brokers. For more information call 1300 510 015 or click HERE to book your free, no obligation reverse mortgage eligibility check.

Smooth Retirement Pty Ltd is an independent service providing expert guidance in equity release and retirement income planning Australia-wide. ABN: 46 619 010 445; AFSL 510015; Australian Credit Licence: 510015; smoothretirement.com.au; info@smoothretirement.com.au; 1300 510 015.

 

[1] Parliamentary Inquiry into the Adequacy of Newstart April 2020

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