What does the budget mean for Australian seniors?

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The recent Australian federal budget is clearly good news for those who have been doing toughest: single aged pensioners. Although the $33 per week increase is relatively modest, it will still make a positive difference to the lives of hundreds of thousands of people.

The implications for self-funded retirees and part pensioners are less positive, however. It’s no secret that over the coming decades the the ageing population will put enormous strain on government finances. The recent deterioration in tax revenues arising form the global financial crisis has only exacerbated this, which has in effect brought forward the government’s response to this problem.

By reducing the pension payable to part-pensioners, the government is sending a message that it expects wealthier retirees to more fully ‘pay their own way’ from now on. However, with the reduction in super and investment values that many part-pensioners and self-funded retirees have experienced over the last twelve months, the options for this are increasingly limited.

Consequently, it seems very likely that in the short and medium term many people in this group will begin to consider equity release finance and reverse mortgages as once of the few viable means for supplementing retirement income.  Eventually, this is likely to encourage a further proliferation of new reverse mortgage lenders hoping to capitalise on booming demand for these financial products. In this environment, it will be crucial for senior borrowers to obtain quality information and guidance from an independent accredited reverse mortgage specialist such as Seniors First.