Prime Minister Scott Morrison announced today that he will quickly scrap the Government’s plan to increase the retirement age pension to 70. “We will ratify it next week. The pension age going to 70, gone,” Morrison said in an interview with Today Show.
In the 2015 Budget, the Coalition decided to gradually increase the qualifying age for pension to 70. However, the new PM said that the last Budget comes with many measures that can help Australians live “a longer, healthy and more active life.”
At Seniors First, we view this news as a positive one, because we believe Australian seniors should receive their entitlements as soon as they reach 65. But it is important to note that the pension age has already started going up from 65 years and Australians who are turning 66 in the first half of 2019 will have to wait to July in order to qualify.
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Many Australians will depend on the age pension as their primary source of income once they retire. Even those who have saved money in their super are looking forward to receiving their entitlements to cope with the costs of living.
The move to raise the pension age to 70 was called a “sensible plan” as it will avoid too much strain on government finances.
In a report published in 2014 by the National Commission of Audit (under the Abbott government) revealed that without policy change, the cost to taxpayers of the age pension would rise from $39.5 billion in 2013-14 to $72.3 billion in 2023-24.
The report also projects that by year 2055, the number of Australian seniors over 65 years old would increase to 8.9 million, which would represent about 1 in 5 of the expected population.
As of this writing, there is no clear plan from the current government on how it could ensure a sustainable age pension system that would provide a safety net for Australian seniors in the future.
There is still no certainty if the current government plan to scrap the move to increase age pension will really push through, and there is no guarantee that the Australian pension system will sustain your needs when you reach retirement. That is why it is ideal to look for alternative solutions to make sure you can live a comfortable life when you stop working.
One viable solution is to unlock your home equity through a Reverse Mortgage loan.
If you are already 60 years old, you own your own home, and you are in need of cash for your retirement needs, you can choose to convert the equity of your own home and transform it into either income stream or lump sum.
A Reverse Mortgage loan is often recommended for retirees who have already paid off their mortgages and require money for their expenses such as home renovation, aged care accommodation, debt consolidation, and more.
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But take note that this product is not for everyone. Only those retirees who are willing to decrease the proceeds from the sale of their property by the loan amount plus interest charges are ideal candidates. These are usually retirees who want to stay in their homes until they pass away.
If you want to learn more about how Reverse Mortgages work, you can download our FREE REVERSE MORTGAGE GUIDE.
You can also call Seniors First on 1300 745 745 or post your comments below.