Empty nesters have room to grow savings

As your spring chicks grow up and fly the coop, a big empty nest in your autumn years need not be inevitable or desirable.

Stretching back for generations, government policies have encouraged Australians to tie up the bulk of their wealth in their family homes.

But with the earliest of the 4 million-strong Baby Boomers having started retiring this decade,(1) governments are beginning to reassess the economic and social burden of pensioners living in over-capitalised houses. This was part of the thinking behind this year’s federal budget proposal to allow retirees selling into smaller homes to have up to $200,000 of excess sales proceeds quarantined from the pension means test.(2)

If it takes off, the concept to incentivise retirees to downsize is going to be a significant windfall for many and provide opportunities for them to make other investments outside their primary home.

For many approaching or in retirement, however, downsizing is not attractive.

Perhaps they want the extra space of a big house to help look after grandchildren or maybe they have more than enough cash for potential investments or to help support their adult children, without having to move to a small home.

Empty nesters young enough to still be earning an income may find that without having to pay for the living and education expenses of their children, their savings grow quickly.
In this scenario, it is important to discuss with your financial adviser how you can build some wealth with the new disposable income.

Super ideas

There are many types of investments with tax incentives to encourage Australians to build savings and pay extra amounts into superannuation.

An investment in managed funds, or a balanced portfolio of direct shares are other options.

Paying off debts, whether they be credit card balances or a mortgage, could be a priority for some.

If you have had a mortgage with an expensive line-of-credit facility, that gave you flexibility to draw down money when the kids were growing up, now is the time to review your home loan and perhaps find one that is less costly to service.

Alternatively, empty nesters comfortable with having a mortgage may be willing to use the equity in their homes to fund other money making ventures.

In all cases, professional advice is recommended to ensure any new investment matches your changing risk profile as you age.


  1. Retirement intentions, Australian Bureau of Statistics, 6105.0 – Australian Labour Market Statistics, Jan 2009, viewed May 30, 2013.  http://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/6105.0Feature%20Article3Jan%202009?opendocument&tabname=Summary&prodno=6105.0&issue=Jan%202009&num=&view=
  2. “Budget upside for family home downsizers”, May 15, 2013, Sydney Morning Herald, viewed May 29, 2013. http://www.smh.com.au/business/federal-budget/budget-upside-for-family-home-downsizers-20130515-2jltz.html


This information is provided by Charter Financial Planning Limited (Charter FP) ABN 35 002 976 294, an Australian Financial Services Licensee, Licence No. 234665, a wholly owned subsidiary of AMP and a member of the AMP Group. It is believed to be correct at the time of publication, however, no representation or warranty is given as to its accuracy. No liability is accepted by any company within AMP or their respective employees or directors for any statement or opinion or any error or omission or for any loss arising from reliance on the information contained in this document. Investments may only proceed by completing the relevant application form attached to a current Product Disclosure Statement (PDS). Fund managers will receive fees for their services out of which authorised representatives of Charter FP may be paid commission. Neither the return of capital nor the investment performance of any investment is guaranteed by Charter FP. Past performance is not indicative of future performance. Any advice given in this document has not been prepared taking into account your particular investment objectives, financial situation or needs. Any case studies in this publication are hypothetical are not meant to illustrate the circumstances of any particular individual. You should assess your particular investment circumstances prior to making any financial decisions. This taxation information is based on the continuation of present laws and their interpretation and is a general statement only. Individual circumstances may vary. From time to time we may bring to your attention products, services and other information that may be relevant to you. If at any time you no longer wish to receive information, you may opt out by contacting our office.


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