I read an interesting article today that I would like to share with you and invite you to share your thoughts…

Unlocking the wealth in the family will be a key issue for governments in funding an ageing population, the Productivity Commission says.

“Retirees tend not to use the wealth in their family home,” writes the commission in its study released on Thursday, An Ageing Australia.4

“Policy measures that overcome the barriers that individuals and house-holds face in accessing the equity in the home may play a future role in freeing-up resources for greater contributions to age-related expenses,” it says.

The commission stops short of addressing a central issue; that the family home is quarantined from wealth calculations for aged-care benefits. It suggests one option is a government equity-release scheme. It estimates if the government could access half the increase in home values, age-care funding needs would fall 30 per cent.

The Retirement Living Council, the peak body for developers and managers in the $50 billion retirement village sector, welcomed the focus downsizing and home equity. Executive Director Mary Wood said many older people were asset-rich but cash poor. “Much of their wealth is locked up in the family home. But under age pension rules their pension takes a hit if they want to downsize to safe villas or units,” she said. “The latest budge initiative allowing some seniors to sell the home and quarantine $200,000 without affecting the pension, is a critical first step.”