Protect your retirement from the spiralling cost of living

Whether you’re soon to be retired, or a retiree on a fixed income, the added pressure of spiralling costs may have you beginning to worry about how you’ll make your retirement savings last. 

Instead of fearing the future and worrying about running down your retirement savings, why not do something about it?  

Leading retirement funding specialist Household Capital has compiled a checklist that you can use to assess your retirement cash flow and discover savvy ways to enhance your retirement income and repay any debts without sacrificing a comfortable lifestyle. 

When measuring retirement wealth, most Australians naturally look to their super, but the number isn’t always happy viewing. For example, women aged 60 to 64 retire with a median superannuation balance of $146,900, compared to men who retire with $204,1071*. Neither balance is likely to sustain 25 years in retirement.  

However, if you’re a homeowner, you may well be wealthier than your super. There can be a substantial source of retirement funding found under the roof over your head – even if you’re still paying a mortgage. 

Household Capital can provide Australians aged 60+ with access to home equity via its Household Loan – a super alternative that can be used to improve your retirement lifestyle and beat those cost-of-living pressures. 

ABS data shows outright home ownership among Australians approaching or in retirement is dropping, with a 25% decrease from 2001-2021. But if you’re a part of the growing number carrying mortgage repayments into retirement, it doesn’t have to mean a retirement of scrimping and saving. 

Rather than struggling with monthly repayments or plundering your super savings to repay the bank, you can use your home equity to repay your mortgage or other debt, such as a line of credit or credit cards. The benefit of using your home equity to make these payments is that: 

• Regular repayments are not required, which frees up your retirement cash flow. 

• There is no default risk – you cannot lose your home (but you must meet contractual obligations such as paying the rates and keeping your home insured). 

• You retain your home’s title and full ownership, which means you benefit from future growth in your home’s value. 

• Our Household Loan can be repaid, in part or full, at any time without penalty.

When planning for the future, setting up a contingency fund for unexpected expenses is always a good idea. Whether your medical bills become more frequent, your body corporate fees increase or your home needs some repairs, having the financial confidence to cover anything life throws at you will make your retirement much more enjoyable. 

With access to your home equity through Household Capital, you can establish a contingency fund, drawn on as required, to cover such expenses.

Retirement income is most commonly sourced from a combination of a pension from your super fund and the Age Pension. If that’s not enough for the retirement lifestyle you worked hard to enjoy, an additional income stream from your home equity could make up the shortfall.  

Household Capital provides regular fortnightly or monthly drawdowns from your home equity to supplement your other income streams. This way your income can keep up with the cost of living and means you don’t have to forgo the things you enjoy just to make ends meet.

Do you wish to stay in your own home throughout retirement? Or at least for the most part? One of the benefits of using your home equity to supplement to your super savings is that you maintain 100% ownership of your home.

Home equity can also provide access to capital should your home require renovations or modifications to make it retirement ready. You can also use your home equity to cover the cost of home help if required.

If you would like to learn more about using your home equity to improve your retirement funding and beat cost-of-living pressures, you can:

• Speak to a Household Capital retirement specialist by calling 1300 699 624.  
• Check out Household Capital’s online calculator to see how using your home equity could improve your retirement. 

Applications for credit are subject to eligibility and lending criteria. Fees and charges are payable, and terms and conditions apply (available upon request). Household Capital Pty Limited is a credit representative (512757) of Mortgage Direct Pty Limited ACN 075 721 434, Australian Credit Licence 391876. 

*KPMG, The Gender Superannuation Gap, August 2021