Working longer to boost super vs Reverse Mortgage

By Darren Moffatt

June 1, 2022


A retirement think thank believes that staying in the workforce for at least six years can add more money to your superannuation. 

The Rainmaker report demonstrates the effects of compounding investment returns when a pre-retiree regularly tops up his retirement savings. 

Rainmaker Information provides market-leading data, research, and market insights about the Australian wealth management market.

“The strategic message is simple,” said Alex Dunnin, executive director of Rainmaker in an interview with AFR. “By delaying your retirement just by a few years, you save a lot more in super. 

For example, a 64 year old earning at least $150,000 per year with $1 million in a retirement fund, may double their superannuation savings by age 70 if they make the maximum concessional contribution of $27,500 per year for the next six years. 

This is possible if money is invested in a super fund with a conservative growth (at least 10% p.a.). 

According to ChantWest, conservative growth super funds are now generating returns between 9 and 10 per cent. 

Meanwhile, an increase of 5% would boost the total savings to $1.5 million, with a third of the return due to added contributions. 

More seniors want to stay in the workforce 

But while some retirees are keen to work to supercharge their savings, many are opting to work despite their age to meet their increasing cost of living.

According to the Australian Bureau of Statistics (ABS), additional hours worked by people over 65 have increased more than 40% in the past two years from 685,000 hours to more than 978,000 hours. 

Money is the main driving factor for seniors to delay retirement or go back to work after they retire. 

In a survey conducted by NSA, 20% of respondents would consider re-entering the workforce after retirement, with 16% already working. 

Income was the primary motivator for retirees, with 60% saying that they need the money to make ends meet after retirement. 

ABS also predicts that more than 5 million people aged 50 and above will still be active in the workforce by 2031. 

But choosing to work while on pension is not a walk in the park. 

NSA and other advocacy groups are lobbying the federal government to make it easier for pensioners to continue working or re-enter the workforce. 

One major roadblock is the current pension test. 

According to the current guidelines, a pensioner can receive an amount of private income before their pension rate starts to reduce. 

This is the income test free area which, at 1 July 2020, is $178 for single-rate pensioners and $316 for couples (combined). 

For each dollar of income above the income test free area, the single pension is reduced by 50 cents.

How a Reverse Mortgage loan can help seniors in financial stress

Working during retirement is best done for other benefits such as mental health, pursuing your passion, contributing to your community, and other reasons that can help you live a more meaningful retirement. 

Many people prefer to ‘take a back seat’ even working, such as assuming a consultancy role or switching to a less stressful occupation. 

To relieve the stress of meeting day to day living expenses, you may apply for a Reverse Mortgage loan so you can unlock your home equity and convert a percentage into cash. 

You can take a Reverse Mortgage in a line of credit that you can use for grocery or utility bills or even for emergency expenses such as home maintenance, car repair or medical cost. 

With a Reverse Mortgage, you don’t have to deal with the financial distress of dragging yourself to work just to earn the money. 

You don’t need to make regular repayments and you’ll still remain the full legal owner of your home, so you can still benefit from any increase in its value. 

To help you learn more about Reverse Mortgage, you can download our FREE REVERSE MORTGAGE GUIDE.

You can also call Seniors First Finance at 1300 745 745 or post your comments below.



NOTE: This article is for informational purposes only and does not constitute financial advice. Pension rates and income test criteria quoted are accurate as of the date of publication, and may be subject to subsequent change. Readers are encouraged to check Centrelink for current criteria.   


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