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Downsize to beat the COVID-19 blues

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The Coronavirus pandemic is making its presence felt on so many aspects of our society. Even if only temporarily, we’re questioning our hygiene practises, changing our social interactions, and beginning to feel some very real impacts of an economic crisis. According to a Financial Review story in mid-2019, more than 50% of Australians over 66 were classed “self-funded retirees”. If you are in this category, with income and assets too high to access the age pension, COVID-19 may be causing some sleepless nights from both the health and financial perspectives. Apart from maximising your social distancing to keep the virus at bay, you may also be nervously watching share market fluctuations in hope that your superannuation doesn’t suffer accordingly. The overwhelming advice right now is to not panic – this too shall pass. But there are things you might want to consider as you think about retirement options, particularly on the financial front.

Is your family home feeling a bit oversized and difficult to maintain with kids no longer around to help mow lawns, vacuum floors or clear gutters? Apart from a host of social and emotional benefits, the monetary upside to downsizing may offer a financial safety blanket amidst these challenging times. Recent data from financial institution MLC shows that one-third of 60 to 65-year-olds are retiring with a mortgage and an increasing number of these retirees are downsizing to free up equity in their homes and pay off some of this debt.

The Federal Government is heavily committed to this push towards downsizing. Since July 2018 the aptly named Downsizer Contribution Scheme has provided over 65s with opportunities to contribute up to $300k (or $600k for couples) from the sale of their home straight into their superannuation fund. This one-time offer allows retirees to capitalise on a potentially lucrative tax benefit and boost their savings to enjoy the retirement that they’ve worked so hard to earn.

Don’t put off your hard-earned retirement in the hope of weathering a coronavirus-induced economic storm. Things may be looking grim at the moment, but you can take matters into your own hands. Breathe some life back into your savings by taking advantage of these government initiatives, freeing up the equity in your old house and generating some financial security while the markets are making everyone else nervous. Lifestyle Communities offers some very affordable downsizing options at homes typically priced at 75-80% of median house prices and with ongoing financial incentives such as no stamp duty, council or water rates payable. Most importantly you’ll be locking down a fabulous lifestyle, among 5-star resort style facilities, within a safe and secure community of like-minded neighbours, and you’ll have money left over to live in comfort, no matter what happens.

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