“I was ready to retire, and not sure what to do about my mortgage.”
When he was younger, it didn’t occur to Bill that he might still have a home loan by the time he was ready to retire. But a relationship breakdown in his early fifties, followed by a few years of renting, meant that at age 67, Bill still owed $200,000 on his home loan.
“I really didn’t want to move house, I didn’t want to sell and move. I like my neighbourhood, all the services I use are close by, I have my routine,” he said. “So, I didn’t want to sell. But I was nervous about retiring with a debt that was costing $2,200 in mortgage repayments each month. I was also nervous about using my savings to pay off the debt, in case I needed that money for something else.”
|
Bill’s assets |
|
|
|
Home |
$875,000 |
Exempt from assets test for Age Pension |
|
Superannuation |
$750,000 |
Counts towards assets & income tests for Age Pension |
|
Other savings |
$50,000 |
Counts towards assets & income test for Age Pension |
Bill knew that he was old enough to apply for an Age Pension, but also that his current savings (mainly superannuation) put him over the asset test limit.
Financial Information Service
Bill decided to make an appointment with Services Australia, to talk to a Financial Information Service (FIS) Officer.
“They don’t give financial advice, but what they did was explain how the Age Pension works, and particularly how the income and assets tests work,” said Bill.
Confident to make a decision
Bill realised that by paying off his mortgage, his assessable assets would drop to $600,000, putting him below the Age Pension assets test cut-off point. He would also save the $2,200 per month that he was spending on mortgage interest and principal repayments.
“Doing that means I’m eligible for a part Age Pension and all the other concessions. And I can stay in my own home. I feel happy that I’ve made the right decision for me.”
The case studies on this website are provided for illustrative and educational purposes only, they are general information. You should seek advice from a suitably qualified professional regarding your own circumstances.