A majority of Australian retirees are still concerned about the federal government implementing an inheritance tax, according to a survey.
With a federal election looming, both major parties would do well to reassure retirees they have no major plans to tinker with the retirement system.
A survey of 5000 Australians aged over 50 from retirement funding provider Household Capital, in collaboration with YourLifeChoices and the Centre of Excellence in Population Ageing Research (CEPAR), has found that 78 per cent of Australian retirees are concerned about an inheritance tax.
The survey also found 74 per cent of respondents were concerned about being forced to sell their home to fund their retirement and 74 per cent were concerned the family home would be included in future asset tests.
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The results also showed 73 per cent of Aussie retirees are concerned they will be forced to use the Centrelink Home Equity Access Scheme, which is essentially a fortnightly loan from the government using your home as collateral.
“We are heading into a federal election where more than 50 per cent of eligible voters will be over 50 years of age,” says Dr Joshua Funder, chief executive of Household Capital.
“There is real concern among older Australians about the threat of new taxes that could negatively impact their retirement plans.”
After the threat of COVID and the seemingly endless lockdowns of the past two years, Dr Funder says older Australians are realising the family home usually represents the best option for retirement living.
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It also remains a great way of funding your retirement, but Dr Funder stresses the importance of this funding remaining voluntary and not forced on retirees by governments.
“It’s critical that we improve the awareness of the family home as the best place to live and the right way to help fund retirement,” Dr Funder says.
“The value of home equity saved in the family home is now worth three to four times a household’s superannuation savings.
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“We know government welfare alone cannot meet the retirement funding needs of the nation. Accessing private property in home equity must remain a voluntary, self-funded option available to retirees, not a tax and certainly not at the expense of existing entitlements.”
About 80 per cent of survey respondents indicated their ideal retirement income amount is between $1000 and $2000 more per month than they are currently receiving.
Some respondents even answered that their current retirement income is not covering basic expenses, particularly for those who rely on the Age Pension alone.
“Retirement in Australia is appalling. You have to survive on a minimal amount of money, living below poverty line,” one respondent says.
“I’ve adjusted to living in a frugal way, buy most items at op shops and buy groceries from the clearance aisle or when they are half price.”
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