Your family home can play a big part in helping pay for the retirement of your dreams.
It gives you options whether you are planning for life after work or are already living it.
You can downsize to realise more funds, some of which you will be able to put into super as long as you sell after July 1, no matter what your age or work status.
But this will not suit everyone. Indeed, some people may be better off upgrading their home.
When Gloria (not her real name) saw her financial planner recently he suggested she use part of the funds he manages for her to buy a better home.
Gloria was one of the 330,000 age pensioners who lost a part pension in the changes to asset thresholds introduced by the coalition government from January 1, 2017.
Currently, home-owning singles can have up to $542,500 in assets before losing the pension (previously $793,750) and home-owning couples $837,000 (previously $1,178,500).
Gloria lives in a delightful but tiny apartment that is part of a grand old house.
The repair bills are constant and growing. Gloria could sell this property, which is in a regional town, for about $280,000. If she then upgraded to a modern, larger strata unit for about $480,000, her planner worked out she would be in
a better position.
She would have just as much regular income to live on because her part pension would be restored as she would be using part of her investment nest egg to upgrade her home.
Her overall position would be improved because the value of the newer property would increase more rapidly than the older one and would also need much less maintenance. And Gloria would have a better asset to use if she later had to go into care.
Some other retirees have chosen to upgrade their existing family homes to get their assets below the thresholds for receiving a part pension and the other perks that go with it.
As long as they renovate carefully they too should have a better asset to use later in their retirement if they need to move into a nursing home or release funds by taking out a reverse mortgage or entering into an equity release scheme.
Another couple, Bill and Jenny (not their real names), could have benefited from the new rules on contributing to super from selling their property if only they had been aware in advance that there would be changes from July 1, 2018.
The new measure means people aged over 65 can sell their family home as long as they have owned it for 10 years and park $300,000 each, or $600,000 in total, into their super fund at any age and without having to satisfy a work test.
This couple in their late 70s had only very small superannuation balances when they sold their farm last year and moved into a smart townhouse, realising about $500,000 from the change of their main residence.
They’re not financially savvy people and the thought of finding an adviser they could trust is daunting, so their $500,000 sits in term deposits going backwards.
If they had sold their farm after July 1 this year they could have put the $500,000 into their industry super fund and be earning a much better income from their investments to supplement their pension.
Under the new scheme there is no requirement to purchase another home, so it could also suit those who want to sell to live with family, perhaps in a granny flat, or those who want to travel for a period, perhaps renting a modest country property as a base.
There is always the option of later withdrawing the money from super to buy a new family home.