Share slump hits seniors hard, but home holds the key

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MFS; Centro, Allco; ABC Learning; City Pacific – just some of the big names that have been battered by the recent share market slump. If you had money invested in these stocks (and many seniors did) you’ve probably seen your retirement investment portfolio take a big hit. Or perhaps your super now looks like it won’t last as long as you had thought?

Either way, you’re not alone. This is becoming an increasingly common problem, particularly for self-funded retirees. Whilst the increase in cash rates is positve for those with money in fixed term desposits,  if you’ve been relying on dividend income then you may now find yourself short.

If however you own property, then it’s very possible you can use your house to bridge the gap. It’s still relatively unknown that seniors in Australia can use a reverse mortgage or equity release plan to give them a regular income stream. Known as an ‘instalment plan’ or ‘income plan’, a set amount is deposited monthly into your nominated bank account.

The benefit of taking a senior’s loan in this fashion, is that the interest is only accumulated very gradually as each monthly payment is received, therefore maintaining equity much longer than if funds are borrowed as a lump sum. In addition, it will also be less likely to have any adverse impact on the government aged pension.