If you are 65 years old or older, you may choose to contribute to your superannuation from the proceeds of selling your dear home. With the recent superannuation changes made, it’s stipulated that you can now put a sum of up to $300,000 in to your super fund.
With such an update, many retirees have been thinking about selling their family home to help fund a better retirement. Is that the right decision?
Turning the Home’s Value Into Super
This change particularly targets folks who are in their mid-60s or 70s who may have missed contributing to a superannuation fund decades ago before superannuation become compulsory. It’s worth noting that it wasn’t compulsory until 1989 so there have been many within the said age group who aren’t enjoying such a benefit as much as younger age brackets do.
If you’re part of the said age group, you now get a chance to convert your home’s sale value into a stable source of income. Deborah Rognlien, a financial planning expert, recommends retirees selling their home for such a purpose, if they are struggling to fund the lifestyle they desire in retirement.
Steady Income in Your Retirement Years
Deborah says that retirees contributing to their super fund through this manner can enjoy a stable source of income deep into their retirement years. It’s still a balancing act but it offers better financial freedom to 65-year-olds and older.
Instead of simply tying up value to the roof over their heads, retirees can now convert it into a liquid asset. With their super fund given a boost, they can now afford to spend on personal experiences or achieve a better quality of life.
Practical Reasons to Sell the Family Home
In reality, some retirees have good motivations to put their house on the market. With piling costs that include insurance payments, property taxes, and routine maintenance, staying in the home could be well beyond what the retiree can afford.
In some cases, the retiree may be having health issues and he or she probably cannot pay for home renovations that will make the place conducive to the individual’s specific needs.
Downsizing as a Wise Financial Move
When you decide to sell your home and put the proceeds in your superannuation, keep in mind that the contribution you make is limited. If you sell your home for over a million, that leaves you with enough funds to put into a super fund and your pocket.
From there, you can choose to buy or rent in a smaller house or less expensive area and invest the rest of your funds into other viable financial vehicles. This is a good example of not having all your eggs in one basket as Deborah shares in her talk. Diversification of assets will certainly be a possibility when you have extra funds from selling the family home.
When considering selling your home; all you really need to do is ask yourself this: is my house standing in the way of richer life experiences?