By Mark Teale on Jul 17, 2019 9:00:00 AM
Home sweet home. There is no place like home. Home is where the heart is. Home is shelter from the storm - all types of storms. The quotes about home are endless, but I believe at the core of most, a home provides a person with security, warmth, peace, comfort and familiarity.
Although it goes without saying that while you are trying to save and then pay off your mortgage, the home is also a cause for a great deal of stress in a person’s life. However, for most retirees it is the most important asset that they own.
This asset for which they have worked so hard is filled with memories both good and bad. For most it will always be the happy memories which linger on in their minds as they age and no doubt it is these memories and the feeling of familiarity which makes letting go of your home as you age so difficult.
My mum who is in residential aged care talks often about home and how much she misses it.
As a teenager I could not wait to leave home. I had left by the age of 18 which I know is a little different to today’s generation of teenagers who I understand are more than happy to stay at home for as long as they are able to.
Back in the day, not living in my own home or owning my own home was unimaginable, however I know there is a growing number of retirees who do not own their own homes yet and are still paying off a mortgage or renting accommodation. What is worse is the increase in number of people over the age of 55 who are homeless. According to the 2018 census around 18,500 people are living rough on the streets with no home.
I am unsure of the events that unfolded in their lives that lead them to a situation such as this so late in their lives, but for most their future would appear very bleak.
Owning your home as a retiree provides security and a very important safety net, it is generally the largest and most valuable asset a retiree will own. For the purposes of calculating a person’s age pension entitlement it is exempt regardless of the value. Provided your home is constructed on no more than 5 acres it is not considered when your age pension entitlement is calculated.
Even when a person enters residential aged care the value of the home is capped - $165,871.20 as at the 1st of July 2019.
The reality for most single elderly people entering aged care is that they will have to sell their home to pay for the accommodation and care costs so the capping on the value of their home becomes meaningless.
Which brings me to my final point.
A person’s home does not belong to their children. What do I mean?
I talk to advisers every week and occasionally (not very often) a situation arises where mum or dad needs to enter a residential aged care facility and to do so they need to sell their home. Nothing unusual about that, until their children sometimes question the need to sell the home – their inheritance – to ensure that mum or dad receive the proper care.
I have even had a situation arise where one of the children took legal action to stop the sale of the home because it had been left to them in mum’s will. The fact that mum was still alive did not stop the child believing that the home was legally theirs.
A home can provide a great deal of comfort, a sense of security and a source of capital in later life to ensure a person receives the best of care. Unfortunately, it can also cause a degree of stress and guilt later in life as well which should not be the case.
Would welcome your thoughts and opinions.