Federal Election 2019: Aged pensioners on fixed incomes open up about tough financial choices

MAY 3 2019



Hilary Croger, 84, still lives in same house in which she came to live as a newlywed with her late husband Russel in 1955.

Key points:

  • Aged pensioners who are asset rich but cash poor are seeking out alternative options for income streams
  • Downsizing is the option chosen by some, while reverse mortgages provide an option for those that want to avoid downsizing
  • While both options provide some benefits, both reverse mortgages and downsizing in a declining property market can mean uncertainty too


The hilltop home, separated from panoramic views of Lake Macquarie by a strip of nature reserve, holds 62 years of memories.

“We built our own home, with our own hands, over a period of about 10 years,” Mrs Croger said.

When her husband died 20 years ago she survived on his superannuation, which has now been exhausted.

Mrs Croger does not want to downsize and has slowly come to accept that she is asset rich, but income poor.

“It’s just because it’s sitting on the lake,” she said.

“I’d like to hang onto it as long as I can, but I do understand that the end is nigh.”

Downsizing a tricky option for some seniors

*Chief Executive of COTA (Council of the Ageing) Australia Ian Yates does not like the word ‘downsizing’.


“We like to call it ‘right-sizing’,” he said.*

“It’s about finding the right number of bedrooms, size of garden, location, degree of upkeep that they need.”

Mr Yates said that reverse mortgages are a way to enable people to safely access some of the equity in their home.

“Sometimes they can do that by downsizing, but there are very good reasons why people don’t want to do that,” he said.

“Financially, making that decision can be tricky, and there are disincentives in the pension system to doing it.”

Reverse mortgages are touted as a way to unlock equity in the family home by borrowing against the asset without needing to make repayments until the house is sold or the owner moves out or dies.

But a number of banks, including Australia’s biggest lender the Commonwealth Bank, are now getting out of the reverse mortgage market, in the face of criticism from the peak financial regulator, ASIC.

Mrs Croger conceded her family home is expensive to maintain and, after carefully considering the options, with the help of her son, she set up a reverse mortgage.

However, she “hasn’t touched it”.

“I’m of that generation where I just can’t,” she said.

“I will do anything not to touch it, even with this blinking dishwasher.”

Meanwhile, crippling bills keep rolling in.

Keep a lid on living expenses


Marlene Hutchinson, 83, from the Newcastle suburb of Tarro, decided to downsize when her husband Dave died two years ago.

“The only money we have to pay is for strata cost, and that covers insurances and the outside of the building,” Mrs Hutchinson said.

“I just had a leak in my roof, and the insurance company arranged for a contractor to come and fix it all up.”

Mrs Hutchinson has kept meticulous records of her household spending in exercise books since 1964.

She uses a system where she maintains a modest nest-egg which acts as a float.

“My bank passbook has my income in it which is my pension, and I only use that very frugally.

“I try to keep a balance … and some months it will go down.

“In April I had [bills] of about $1,800, which would have wiped out the pension completely.

“But having that bit of a balance in my bank account I can work against that.”


The cheapest of all is a quarterly bill for electricity usage, coming in at just $47, thanks to rebates from the solar panels.

Mrs Hutchinson is also very canny about other ways to save pennies.

“I’m very particular about when I use the electricity,” she said.

“While I’m watching the TV of a night, I’ll have the washing machine going, so it’s ready to hang out in the morning.

Cheaper rate, you know? You’ve got to think of these things.”

Uncertainty, anxiety around downsizing


The story of Hilary and Marlene, both widows, born only a year apart, demonstrates the diverse population of older Australians.

“They are not all the same,” Mr Yates said.

“They’re the most diverse population segment we have, with all sorts of different needs.


“The system has to be flexible to meet those, but simple so people know how to plan.”

For Mrs Croger a housing bubble has seen her property valuation plummet from a valuation in excess of a $1 million.

The uncertainty has left her feeling anxious, with big decisions to make.

“I’d rather sell it to my family,” she said.

“Either one of the boys would be interested.”

One option if she sold, Mrs Croger said, would be to move into a granny flat on her daughter’s rural property.

But she worried about becoming isolated from her community.

“I coordinate a pastoral care team, an umbrella of our local church [where] every person in our congregation gets one phone call a week at least, or a face-to-face visit,” Mrs Croger said.

“We visit into the homes of the really house-bound people, and the ones who are the happiest are the ones who are in their own home.”

For Mrs Hutchinson, community and socialising is also important.

Her social life revolves around the Beresfield Seniors Group of which she is the secretary.

“Most of my social outings I’ll have with either the seniors as a group,” she said.

“In a week we’re going on a dolphin cruise at Nelson Bay, so we pay our money off over a period of meetings.

“[On the day] I just turn up and get on the coach and off we go, you know? You don’t miss that sort of money.”

Mr Yates said ‘the whole issue of retirement income” is a ‘significant’ issue.

“Not just the pension, but the pension and how the superannuation system works with that, and how that all works with tax, and the fact that both sides keep changing the system,” he said.

“There are experts saying that our retirement system has become so complex that they don’t know how anybody can work out what the right choices are.

“We need to find better ways of giving people advice, without going into full financial advice, and that’s something missing from the system.”