Everything old is new again. Legendary entertainer Peter Allen sang it, and now another prominent Australian, Treasurer Josh Frydenberg, is doing the same — albeit without a maraca.
- The budget contains incentives for older Australians who want to sell their family home
- But if you don’t want to move out, there’s a scheme to unlock equity in it too
- Aged care was also a major focus in Josh Frydenberg’s budget
For retirees or people thinking about leaving the workforce soon, this federal budget is more about tweaks to existing programs than big new announcements.
Indeed, one of the challenges identified in the papers is getting older Australians to take advantage of existing schemes designed to give them a bit of extra cash.
As Allen sang to us in 1974: “Don’t throw the past away, you might need it some rainy day.”
But, back to the budget, where older Australians will be pleased to know there are no changes to the aged pension.
The budget papers say “assistance to the aged” will cost taxpayers about $77.16 billion this financial year, which will increase to $89.6 billion by 2024-25 as Australia’s number of pensioners goes up too.
This is all the other stuff you should know.
Thinking of downsizing?
If you own a home and are thinking about downsizing, there are some incentives in the budget you should know about.
They’re not completely new — they’re changes to an existing program you may not be aware of — but more on that later.
From July 1, Australians aged over 60 will be able to make a one-off, post-tax contribution of up to $300,000 per person (or $600,000 per couple) to their super when they sell their home.
These contributions are (mostly) exempt from caps placed on super contributions, and the budget papers state the scheme will allow empty-nesters to “consider downsizing to a home that better suits their needs, thereby freeing up the stock of larger homes for younger families”.
Previously this scheme was only available to people aged over 65. What’s new in this budget is the age limit has been lowered to people aged 60 and above.
If you didn’t know about this scheme, you’re not alone. The number of people actually using it remains to be seen.
According to the budget papers, the impact of this change in forward estimates is expected to be “negligible”, which also implies that very few people must be using it now.
What if I don’t want to sell?
Here’s something for older Australians who own their own home and want to use some of the equity in it to boost their retirement income without selling up.
The government has tweaked its Pension Loans Scheme (PLS) to allow lump-sum payments, meaning eligible singles and couples could have almost $20,000 more per year.
This voluntary scheme is basically the opposite of a mortgage and is available to people who claim the age pension and self-funded retirees.
Retirees who own their own homes can get their hands on some extra cash each week by borrowing against the value of their property — the balance of the loan is paid when the property is sold.
The budget papers say: “Eligible people will be able to receive a maximum lump-sum advance payment equal to 50 per cent of the maximum age pension.”
That’s around $12,385 for singles and $18,670 for couples.
If you’ve never heard of the PLS, you might be about to. In the budget, the government is allocating $21.2 million to “improve uptake” of the scheme, and part of that will be spent on “public messaging and branding”.
What about aged care?
After a scathing royal commission into aged care, the government is tipping an extra $17.7 billion into the sector over five years.
The money will be spent on 80,000 new home care packages over the next two years, even though the royal commission found that as of June last year more than 100,000 older people were waiting for one.
In terms of residential aged care, an additional $10 per resident per day will be provided from July 1.
That was one of the royal commission’s recommendations, and here’s another: The government is injecting $3.9 billion over the next four years to mandate the “care minutes” of 240,000 aged care residents and 67,000 people accessing respite services.
It’s hoped this will mean fewer unanswered call bells and mean residents can spend more time with registered nurses.
There’s also $216 million over three years to help train people in the sector and $798 million over the next five years for respite care and support services.
And, if negotiating Australia’s aged care system is a daunting prospect, the government is tipping in $200 million for a new star rating system so assessing the options is easier.
We want to hear your questions and comments about the budget and how it impacts you. You can submit your response here.