Here’s 4 ways to boost your income…

Want to break free from being asset rich and cash poor? Turns out, you’re not alone!  Data from the ABS (Australian Bureau of Statistics) shows almost one-third of older Australians in low-income households were asset rich but cash poor.[1] Most of their wealth was tied up in illiquid assets.  In particular the family home.

But, there’s no need to scrape by on so little. There are ways to try boost your income.

1.    DOWNSIZE YOUR PROPERTY

Selling up and moving to a cheaper house may free up wealth to help fund retirement. But, do keep in mind that it might affect benefits if you’re receiving a Centrelink Age Pension. Some of the proceeds from the sale might be counted as assessable under the Assets Test.  This could lead to a drastic cut in your pension if you suddenly acquire additional cash.

2.    SUPPLEMENT YOUR INCOME

Getting a part-time job or cashing in on a hobby could boost your cash flow if you are retired . But remember that working when you have become eligible for an age pension may reduce your pension amount under the income test.  It’s best to discuss with your adviser how you might optimise your retirement benefits while working part time.

3.    RENT OUT YOUR PROPERTY

If you have extra space in your home, such as a spare room or two, you may consider renting it out, either full time or on a part-time basis. Or if you have another property, like a holiday home, you may look into listing it as a short-term student or holiday rental.  This too could impact the tax you pay when you sell your home so you should seek advice on these strategies.

4.    REVISIT YOUR INVESTMENTS

Have you invested in securities? With cash rates at an historical low, this may be a good time to meet with a financial adviser to review your portfolio. Your financial adviser may recommend strategies and ways to increase income and/or reduce your exposure to risk and volatility in the event of market movements.

UNDERSTAND THE RISKS and BREAK FREE

You don’t have to be trapped in a situation where you are always asset rich but cash poor. There are ways to boost your income, but keep in mind that some involve taking big risks. So seek financial advice to help you weigh your options and make decisions based on your on personal financial situation.

The Advisers at Wealth Planning Partners in Robina are ready to help you with financial advice tailored to your financial situation.

Note
[1] Australian Bureau of Statistics, March 2016, ‘Many older Australian households asset rich, income poor’, accessible at: https://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/6523.0~2013-14~Media%20Release~Many%20older%20Australian%20households%20asset%20rich,%20income%20poor%20(Media%20Release)~40