I had a meeting with some potential clients yesterday and the discussion turned to their (to me anyway) lack of preparation for retirement.

The husband (like all good dominant alpha males with a strong case of denial) advised that given that they had not accumulated anything other than their house, would be able to sell that to fund their retirement.

This always concerns me when I hear it for a couple of reasons:

1)      Yes you can sell your house – but you will still need to live somewhere and very few people want to move from where they are comfortable to a smaller house in a less affluent suburb;

2)      There is a social stigma to doing this – “It doesn’t bother me,” they say – 10 years before they have to, but when they do have to, they cannot move.  Actually it also amazes me when people say they can live quite frugally if they have to but have a house full of plasma televisions;

3)      Downsizing for many people is a smaller property – but usually at the same price; and

4)      I am yet to actually witness a family selling their house to fund their retirement – have seen a few have to sell their house because they hit hard times or the breadwinner died, but that is a story for another day.

So it is with interest that I again read that market commentators say that our housing market is one of the 2 most overvalued in the world and needs to fall by 42% to reach its long term price ratio compared with family incomes – I have mentioned this a number of times in the past, see the following link : http://www.thebfsreport.com.au/featured/house-prices-again-is-it-a-bubble-or-not/

Or see also http://www.thebfsreport.com.au/retirement-planning/your-house-or-your-superannuation/

But I do think that Australians need to be aware of housing trends, particularly if they do think it will be the mainstay of their retirement income – have a look at this article, the link is attached and let me know what you think: http://www.theaustralian.com.au/business/housing-market-a-time-bomb-says-investment-legend/story-e6frg8zx-1225880119320

PS – The couple won’t be clients; they didn’t pass my screening tests.

If you do have any questions about this or would like to know more about us, please email me at paul@bronsonfs.com.au or visit us at www.bronsonfs.com.au

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