Retirement Income Streams
Income is an important part of your retirement funding. You may no longer have a regular salary, but that doesn’t stop the bills and other expenses from rolling in. At the same time, you probably have a list of things you’d like to do – you’ve worked hard and have earned a comfortable retirement.
According to the government’s recent Retirement Income Review, retirement income comes from three sources: superannuation, the Age Pension and other savings, including home equity.
The Age Pension is not designed to provide for life’s luxuries; it’s a basic income for a basic lifestyle. Many retirees solely reliant on pension income find it challenging to make ends meet.
Did you know your biggest asset, your family home, can be used to provide a retirement income stream?
How Much Home Equity Can You Borrow?
Whether you need to consolidate debts, increase income or peace of mind see how a Household Loan can help you.
Frequently Asked Questions
Can equity release provide a regular income stream?
A Household Loan can provide a regular income stream, capital - or both! We provide flexibility and choice so you can use your money in a way that best enhances your long term retirement funding.
Taking the money only as you need it will minimise the interest accrued over the life of your loan.
How could extra income transform my retirement?
Some of our customers are comfortable with a basic level of income – enough to keep on top of the bills, enjoy the occasional meal out and to be able to spoil the grandkids. Others look to enhance their lifestyle and enjoy a few more luxuries in their retirement years. What’s on your wish list?
What is home income in retirement?
Australian retirees have more than $1 trillion saved in their homes. Using just a small portion of that Household Capital™ – or home equity – can provide you with an income stream to complement your super and any Age Pension entitlement. And, during challenging times for financial markets, can be used instead of your super to help you preserve it.
Our Home Income solution can provide regular fortnightly or monthly income to improve your retirement funding. You can set up a long term funding solution, or establish an income to see you through difficult periods. This way, we make it easy for you to deal with your expenses and look forward with confidence.
If your needs are modest and require you to borrow an amount equal to less than 1% of your home equity per year (simply take three zeros off your home value to calculate a modest monthly drawdown), you may qualify for accelerated access to your Household Capital. In this circumstance, when you apply online, your retirement income stream could commence within a fortnight of application.
How does interest work on a Household Loan? Accessing the savings in your home using a refinance Household Loan will reduce the amount of equity you have in your home over time.
Because regular repayments are not required, the interest added to the loan balance compounds over time. This means you pay interest on your interest. Over time, the amount you owe the lender will increase. The longer the term of your reverse mortgage, the more interest compounds.
Alternatively, Household Capital offers an ‘interest only’ facility, where you can make regular payments so that at the end of the term, only the amount you borrow is repayable.
See more on interest rates and fees.
*The Comparison Rate is based on a loan of $150,000 for 25 years. WARNING: this comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
Customer Stories: Replacing Dividend Income
Molly is 85 years old and lives in a long-standing family home in Hampton, Victoria. Her husband passed away some years ago and she has a large family of four children and many grandchildren.
Molly has an investment portfolio of ‘blue-chip’ shares. The dividends from her shares, together with a partial government Age Pension, make up her regular retirement income. Recent cuts to dividends have reduced the level and certainty of her income.
Molly’s home is valued in excess of $5 million. With the help of her family, she wanted to develop a plan for the next 10 years, one that accesses a small part of the wealth built up in her family home.
Her objectives were simple: improve the certainty of her monthly income, establish a facility to cover unexpected expenses, and return to travelling when the current environment improves.
Household Capital helped Molly understand her options on a Zoom call with her and other family members. We then established a plan to meet her needs, improve her confidence and use a previously ‘dormant’ asset to improve her retirement lifestyle.
Note: customer names and images have been changed to protect their privacy.