The goal of paying off your own home is something that takes most people 30 years to accomplish. The family home can certainly change a lot over that time, with kids growing up (hopefully) and moving out (hopefully).
The concept of putting every spare dollar into the home loan to have it paid off before retirement often leaves future retirees a very short time frame to put any additional money away into super. This can create the common ‘asset rich and cash flow poor’ situation.
So, you’ve just retired and all your cash flow is tied up in a house that is probably a little too big for you now and you’ve got no spare funds to really go and enjoy yourself after 50 years of work.
‘I wonder what options I have?’
The Australian government passed legislation on July 1st 2018, allowing retirees who are over the age 65 to make a payment into superannuation with the proceeds from downsizing their own home. The scheme is called the Downsizer Contribution Scheme. Not many people are aware of this scheme and it isn’t marketed as well as it should be.
Retirees can now make a non-concessional contribution allowing for as much as $600,000 ($300,000 per homeowner) to be contributed into superannuation after the age of 65.
This scheme may give you the chance to have the retirement you have always been dreaming of but didn’t know you had until now.
If you’d like more information about the scheme, please see the factsheet from the state government provided here.