Reverse mortgages called on to plug savings gap
Post-retirement incomes for the bulk of Australians over 65 will fall well short of desired levels over the next decade unless reverse mortgages are used to supplement their super assets, according to a new report.
Trowbridge Deloitte’s Equity Release Opportunity for Financial Planners report projects a “substantial retirement income mismatch” for retirees, who are expected to increase by 50 per cent over the next decade.
Commissioned by Bluestone Equity Release, the report puts the current average superannuation assets of a retiring household at age 65 at only $105,000.
Trowbridge Deloitte partner James Hickey, who wrote the report, said there has been insufficient time since the launch of compulsory super in 1992 for retirees to get their retirement planning in order.
He said the statistic represents a “significant opportunity for consumers to use equity release to support retirement income.
“Despite having almost twice as much equity in property as super assets, home ownership has rarely featured in the financial plans of retirees outside of selling it outright.”
But he said the reverse mortgage could only be used to plug the looming retirement income gap with appropriate financial advice..
“It is a tool that will be called on increasingly as clients challenge their advisers to find solutions to compensate for their diminishing allocated pension.”
Recommended for you
ASIC has permanently banned a former Perth adviser after he made “materially misleading” statements to induce investors.
The Financial Services and Credit Panel has made a written order to a relevant provider after it gave advice regarding non-concessional contributions.
With wealth management M&A appetite only growing stronger, Business Health has outlined the major considerations for buyers and sellers to prevent unintended misalignment between the parties.
Industry body SIAA has said the falling number of financial advisers in Australia is a key issue impacting the attractiveness and investor participation of both public and private markets.
