The apparent disconnect between retirement savings and untapped home equity is one of the most puzzling situations in the financial services space, according to Deloitte.
With more than $500 billion is held in home equity in Australia, it seems logical that retirement income conversations start focusing on how to leverage that market, the accounting and advisory firm's annual Reverse Mortgage report said.
He said planners have a key role in educating retiring clients about equity release options.
"Banks, insurers and superannuation funds are best placed to better embrace, understand and educate Australians on the option of equity release products," Deloitte Financial Services partner and author of the report, James Hickey, said.
"These are the groups seeking to help their customers aged 65 and over to navigate their retirement with the dual challenges of longevity and income sustainability. Bringing what is often their most substantial asset – their home – into such discussions must be in the best interests of everyone," he said.
Hickey said retirees have just a third of their required savings for retirement, according to the Association of Superannuation Funds of Australia's modelling.
"Given that for many retirees the equity in their home continues to represent two thirds or more of their entire wealth, well in excess of their superannuation balance, a reverse mortgage is a very useful consideration for cash-poor asset-rich retirees who want either extra cash flow or to fund an aged care accommodation bond."
