Top up your spending power

Older Aussies who could do with some extra cash can take advantage of the wealth tied up in their home

- Pam Walkley

Rising inflation hits many older people hard, because once you retire and start living off your savings, inflation eats away at your purchasing power.

And living costs for retiree households are often skewed towards the areas with the biggest price rises, such as food and power, given retirees generally spend a higher portion of their income on these goods than working households.

Retirees living on fixed incomes – either the pension, their super or a combination of the two – can’t ask the boss for a pay rise, but they can utilise their family home to increase their spending power and improve their standard of living.

There are three main ways you can use your home to provide more money to give you a better lifestyle in your retirement:

1 Downsize

This involves selling your current home and buying another to live in. It can particularly suit couples or singles living in large houses who would prefer a smaller and more convenient home.

But, as with most strategies, there are pluses and minuses. Downsizing can increase your cashflow, lower your utility bills and reduce the time you spend on maintenance and upkeep.

On the downside, selling and buying is expensive: stamp duty, real estate agent fees and moving expenses can easily add up to $50,000 or more. On a $600,000 purchase, for example, stamp duty varies from a high of $31,070 in Victoria to a low of $12,850 in Queensland, with most other states and territories charging more than $22,000. The ACT is the only exception at $15,720.