Ask Paul: Should I buy a property before I turn 65 so I can get the pension?


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Q. I am 61 in a commission-only job paying about $80,000 and my wife does 25 hours a week at $40 an hour. We are renting for $610 a week.

We have $900,000 sitting in a term deposit.

I have $27,000 in super and my wife has $60,000.

ask paul buy house claim pension

We are not sure what to do from here. We have been told to buy a property before I turn 65 so I can get the pension.

We have been talking to HESTA, which advised us to put some funds into a managed fund and some in super. Your thoughts would be appreciated. - Alison

A. Alison, I really believe that owning a paid-off property is a key to a quality life in retirement.

The fact that the home does not count as an asset towards the aged pension is not the key reason for owning a home but it is one huge bonus.

It would also get rid of your rental costs, freeing up money. This I would discuss with your super fund as I suspect it would be wise for you to top up your super via salary sacrifice.

Any surplus could go to a well-run, low-cost managed fund but this is pretty simple to do.

The property market is soft and in many parts of Australia it is falling, so depending on where you live it presents a good opportunity for cash buyers.

But regardless, I really do think you should buy a home or apartment that you would be happy to live in and is suited to your retirement needs, and invest any surplus cash plus your savings.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Click here to ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. Please view our disclaimer here.

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