November 29, 2014

Vol 4 Ed 11

Volume 4 Edition 11 Newsletter

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FINANCIAL CARE SERVICES Independent aged care, lifestyle and financial advice for seniors

Volume 4 Edition 11– 28 November 2014


Honouring those who served our country 

Many of those who served our country in the great wars later experienced health problems arising from that service.

Compensation for loss of health is payable to veterans and merchant sea men who ‘faced the enemy’ and their widows, or widowers. DVA administer the veterans Compensation and War Widow Pensions on behalf of the Australian Government.

The Commonwealth pays DVA Compensation Pensions and the Income Support Supplement, ISS, to veterans who suffered health problems as a result of active service facing the enemy. The surviving spouses of veterans who died from war related causes are eligible for the DVA War Widow Pension.

If the DVA Compensation Pension recipient has little other income or assets then the Income Support Supplement could be payable in addition to the DVA Disability Pension or the DVA War Widow Pension.

The DVA Compensation Pensions and any Income Support Supplement are treated as income for the purposes of the aged care means tested fees.

Read more about the DVA Compensation Pension Income Support Supplement

The DVA Service Pension is available to veterans with ‘qualifying service’ who are not eligible for a Compensation Pension. The Service Pension is payable at the same rates and subject to the same financial means testing as the Centrelink Age Pension. The Service Pension is available five years earlier than the qualifying age for an Age Pension in recognition of the overall impact that active service has on the veterans’ general health.

Retirement brings changes to lifestyle and income 

On retirement from full time work we each need to develop a new pattern of spending time and money. Suddenly we might find that we have more time available for the activities we enjoy. But we also discover that our salary has stopped and arranging another regular income is a challenge. 
The challenge for retirees with large superannuation account balances is how to invest their superannuation and other assets to generate a good income. Some retirees become focused on managing their investments whilst other retirees are happy to outsource the daily investment decisions. 
The retirement financial plan for some folk is to using their superannuation to payout their home mortgages and then ‘go on the pension’. These retirees have the challenge of adjusting to a much lower level of income whilst having an excess of leisure time.
You cannot expect to cover your mortgage interest or make capital repayments on your home loan when your only income is the Centrelink DSP or Age Pension. 
Therefore you need to clear your debts before you exit the workforce.
Whilst you might hope to continue in full time work until age 70 years, injury, ill-health, retrenchment or economic downturn could force an earlier retirement. Your retirement planning needs to consider paying off the home loans long before your ‘planned retirement date’.

Remember the Age Pension provides for a frugal lifestyle only. Reminder, the maximum total combined Age Pension for a couple is $1,288 per fortnight, that is, $644 each per fortnight. A Single DSP or Age Pensioner is entitled to a maximum of $854.30 per fortnight from Centrelink.

A modest lifestyle in retirement requires a little more than just the Pension. A comfortable lifestyle requires a significant amount of financial resources.

Christine at Financial Care Services engages with clients approaching retirement to plan their retirement finances. Call Christine on 03 9808 0338 to book an appointment to discuss your long term planning for when you no longer earn an income from work. 

Independent professional financial advice

Independent financial advice is advice about the financial aspects of your specific situation from a professional who is not going to benefit from your response.

Professional financial advisers consider your particular situation and advise you on the financial implications of your options. An independent adviser assists you to define realistic financial goals and generate a strategy for working towards your financial goals.
Professional financial advisers charge fees for their advice; the fees are related to the work required to advise you about your situation.

Financial Care Services is an independent financial advisory practice wholly owned by Christine Hopper. Financial Care Services charges fees based on the consultation time and written reports that you require. Financial Care Services holds AFSL number and does not have links to any other businesses.

Reverse mortgages in retirement to unlock accrued equity

Mortgaging the home again could be attractive when big bills arrive for home maintenance or the ‘essential’ dental or elective medical treatment or just that long planned overseas holiday.

Banks offer ‘reverse mortgages’ to retirees who want to access the capital stored up in the value of their homes. The banks realise that the retiree does not have the income to make regular repayments of capital or monthly interest. Therefore reverse mortgages for retirees allow for the interest to accumulate until the home is sold.

The variable interest rate applicable to a reverse mortgage is usually about one percentage point higher than the ‘variable home loan’ rate from that lender.

When the home is sold the bank is repaid both the capital amount borrowed and all of the interest accumulated during the reverse mortgage loan period.

No bank wants adverse publicity of customers with negative equity in their homes. The bank always wants the customer to get a payout when the home is eventually sold and the mortgage repaid. Therefore to minimise the risk of the amount owing under the reverse mortgage exceeding the proceeds of selling the home, the banks usually lend only a small fraction of the value of the home when the reverse mortgage is granted.

Some banks only grant reverse mortgages to retirees who have attained age 65 years. A few lenders grant reverse mortgages to people who have attained age sixty years.

Most lenders require the owners to be living in the home when the reverse mortgage is granted and to payout the reverse mortgage immediately they move out of the home. Thus moving to a retirement village, lifestyle community living or aged care could trigger a requirement for the home to be sold and the reverse mortgage paid out.

In summary, a reverse mortgage could be appropriate in retirement when the home needs significant repairs or upgrades to allow the owners to stay home safely. Beware of using reverse mortgage debt as the ‘solution’ to a pattern of spending more than your regular retirement income.

Read more about Reverse mortgage debt

Financial Care Services offers short consultations for $99 to Illustrate how much Disability Support Pension or Age Pension you could receive if you had to ‘retire’ from work now.

If you think that you might be eligible for a part Pension you can call Christine on 03 9808 0338 to arrange a Short Consultation, 45 minutes in person or by telephone and/or email to discuss your potential Age Pension position. Please ask for a special ‘short consultation’ when you book your appointment.


Financial Care Services

Christine Hopper

Financial Care Services Pty Ltd
Independent aged care, lifestyle and financial advice for seniors in Melbourne, Victoria, Australia
Australian Financial Services Licence Number
299570 (check this at
Authorised Representative Number
252529 (check this at

Telephone – call +61 3 9808 0338
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Address – mail or meet at 172 Warrigal Road, Camberwell Victoria 3124
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Disclaimer: The information contained in this newsletter is of a general nature only and does not constitute “financial advice”. You should obtain your own personal financial advice before investing any money or moving in to any retirement village, lifestyle community or aged care facility. Financial Care Services is licensed to provide financial advice to individual clients based on their personal situations.

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