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We haven’t paid off our mortgage and are soon to retire. What are the options for retirees paying rent?

Q. My husband an I are approaching retirement and won’t be anywhere near paying off the mortgage. As we are going back to renting , our future looks pretty grim, with not much super. The small amount of equity we do have won’t buy any sort of dwelling. It seems I only meet home owners in our age group. I am wondering if there are others in this position? What are the options, if any, for retirees paying rent?

Answer

Hello and thanks for your question. Unfortunately you are not alone and there are many people approaching retirement who either don’t own a home or have large mortgages relative to the value of their property. There are plenty of reasons for this including marriage and relationship breakdowns, illness and death in the family, job breaks and redundancies, and so on. Needless to say it can seem as if there’s nothing you can do. Thankfully, all hope is not lost and there may be some options available to you to improve your financial situation.

Employment

Obviously, the longer you work the better off you will be but I do appreciate that there are various reasons why this is not always possible – eg your health or the health of your family, job opportunities or family responsibilities. Consider working part time for longer as this will top up your income, provide you with a connection to workmates and the community, and give you some structure to your day.

Accommodation
In relation to options regarding your home, in no particular order and without knowing your circumstances, here are some ideas that you and your husband might like to investigate further:

  1. If you sell your home, where do you live? If you are unable to purchase a smaller/cheaper home then obviously you need to rent. Location and size of property is critical in determining the rent payable. If you live in the outer suburbs or in rural areas, the rent is a lot lower than suburbs closer to the CBD. You may need to seriously consider looking for a new home in a different part of the city or State.
  2. You could consider living in an on-site caravan or cabin. More people are investing in this type of accommodation which does have some permanence to it. It is a low-cost option that might suit your lifestyle.
  3. Granny flat. If you have children or very close family, you could discuss the option of building a granny flat or some independent accommodation on their property.
  4. Retain your home and take in boarders/lodgers. More and more people are taking in students as lodgers to help them financially. Students, particularly from overseas, stay for the school year and generally the board they pay will cover lodging and meals. There are service providers that you can contact that match up students with accommodation.

Income and expenses
From a more general point of view, it’s really important to look at the two basic components of the household budget: income and expenses.

Do you know exactly what your income is? Is there any way you can increase your income? Are you able to work part time after retirement to supplement Age Pension income? Are you getting all the government benefits and tax deductions you may be entitled to? Is your money/super invested in the most appropriate way to suit your income requirements?

Get a very clear handle on your expenses as this will be critical when trying to live on a fixed income in retirement. What exactly are your expenses? Is there anything you don’t really need that you can cut back on? Do you have the best loan terms that you can possibly get? Are you paying for things you don’t use?

Sometimes we need to think creatively about options that are available. Initially they may not seem very attractive but when you weigh up the pros and cons you might surprise yourself. The main thing is not to give up or give in. Take control and take action. If you can’t see any way forward then you may consider financial counselling.

Answer by: Anne Graham

Anne Graham is an Authorised Representative and Credit Representative of Securitor Financial Group AFSL & ACL 240687

Disclaimer:
This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances.

Q. My husband an I are approaching retirement and won’t be anywhere near paying off the mortgage. As we are going back to renting , our future looks pretty grim, with not much super. The small amount of equity we do have won’t buy any sort of dwelling. It seems I only meet home owners in our age group. I am wondering if there are others in this position? What are the options, if any, for retirees paying rent?

Answer

Hello and thanks for your question. Unfortunately you are not alone and there are many people approaching retirement who either don’t own a home or have large mortgages relative to the value of their property. There are plenty of reasons for this including marriage and relationship breakdowns, illness and death in the family, job breaks and redundancies, and so on. Needless to say it can seem as if there’s nothing you can do. Thankfully, all hope is not lost and there may be some options available to you to improve your financial situation.

Employment

Obviously, the longer you work the better off you will be but I do appreciate that there are various reasons why this is not always possible – eg your health or the health of your family, job opportunities or family responsibilities. Consider working part time for longer as this will top up your income, provide you with a connection to workmates and the community, and give you some structure to your day.

Accommodation
In relation to options regarding your home, in no particular order and without knowing your circumstances, here are some ideas that you and your husband might like to investigate further:

  1. If you sell your home, where do you live? If you are unable to purchase a smaller/cheaper home then obviously you need to rent. Location and size of property is critical in determining the rent payable. If you live in the outer suburbs or in rural areas, the rent is a lot lower than suburbs closer to the CBD. You may need to seriously consider looking for a new home in a different part of the city or State.
  2. You could consider living in an on-site caravan or cabin. More people are investing in this type of accommodation which does have some permanence to it. It is a low-cost option that might suit your lifestyle.
  3. Granny flat. If you have children or very close family, you could discuss the option of building a granny flat or some independent accommodation on their property.
  4. Retain your home and take in boarders/lodgers. More and more people are taking in students as lodgers to help them financially. Students, particularly from overseas, stay for the school year and generally the board they pay will cover lodging and meals. There are service providers that you can contact that match up students with accommodation.

Income and expenses
From a more general point of view, it’s really important to look at the two basic components of the household budget: income and expenses.

Do you know exactly what your income is? Is there any way you can increase your income? Are you able to work part time after retirement to supplement Age Pension income? Are you getting all the government benefits and tax deductions you may be entitled to? Is your money/super invested in the most appropriate way to suit your income requirements?

Get a very clear handle on your expenses as this will be critical when trying to live on a fixed income in retirement. What exactly are your expenses? Is there anything you don’t really need that you can cut back on? Do you have the best loan terms that you can possibly get? Are you paying for things you don’t use?

Sometimes we need to think creatively about options that are available. Initially they may not seem very attractive but when you weigh up the pros and cons you might surprise yourself. The main thing is not to give up or give in. Take control and take action. If you can’t see any way forward then you may consider financial counselling.

Answer by: Anne Graham

Anne Graham is an Authorised Representative and Credit Representative of Securitor Financial Group AFSL & ACL 240687

Disclaimer:
This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances.