The Australian Government’s changes to the downsizer superannuation scheme could allow people to retire up to ten years early and invest up to $630,000 from their home sale to their retirement funds. has spoken to financial planning experts about the implications of the changes, announced in the 2021-22 Budget last week.

Under the changes, expected to come into place from July 2022, people aged 60 and up will be able to top-up their superannuation fund from home sale proceeds, compared to a current eligibility age of 65. 

The changes means downsizers will now be able to add to their superannuation funds from home sale proceeds well ahead of the pension eligibility age (which will be 66 and six months from 1 July, 2021). This situation has two significant benefits.

Firstly, it means that people can make a downsizer contribution to their superannuation without fearing that this will result in an immediate reduction in pension payments, as a result of the additional funds breaching the pension means tests.

Secondly, it raises the prospect that people with limited superannuation savings could collect a large amount from their home sale, place this into their superannuation fund, and then retire early and live off these funds, before becoming eligible for the pension in a few years.

These scenarios were confirmed by HLB Mann Judd Wealth Management Partner Jonathan Philpot, who said: “The proposed budget changes will allow more people to take advantage of the downsizer contribution and potentially not have an impact or lessen the impact on a future age pension.”

So, perhaps this may encourage some to retire earlier than planned, do the downsizer contribution and live from this for say ten years and then commence the age pension.”

Watch editor Mark Skelsey interview wealth management expert Jonathan Philpot from HLB Mann Judd at the link below

Potential for $1.26 million individual gain

Separately, AMP Technical Manager Strategy John Perri said it was expected that the downsizer superannuation contribution would be able to be used in conjunction with other incentives to allow downsizers to contribute up to $1.26 million to their retirement funds.

The downsizer contribution will allow individuals to place up to $300,000, and couples up to $600,000, from their family home sale proceeds into their superannuation. 

Mr Perri said it was expected this could be used alongside the ‘bring forward’ superannuation arrangements, which allowed people to combine three years’ worth of contributions up to $330,000 in a single deposit.

In combination with the maximum downsizer contribution, this adds up to a total potential single individual superannuation contribution of $630,000, or $1.26 million for a couple.

“As the rules currently stand, if the downsizer age is reduced to age 60, then our view is that between age 60 and age 65 both the downsizer and bring forward measures can be used, as they are separate measures and not linked to each other,” Mr Perri said.

Mr Perri said this scenario may be useful for someone who has received both a windfall from downsizing and an inheritance.

Mr Perri also agreed that the downsizer superannuation scheme had the potential to allow people to retire early.

If legislated, some individuals who wish to consider downsizing may look to use this measure to further build their super, and may consider retiring at that point as well,” he said.

“Eligibility to slip stream into the pension age at age 66 and above will depend on personal circumstances at that time.”

A March 2021 report compiled by and that the average cash released by downsizing from a house to a two bedroom retirement village unit in 2020 was $286,810. In addition, significant increases in free standing house prices have outstripped apartment prices in the past 12 months, making it a great time for downsizers to make their move.

Comment from our CEO CEO Amanda Graham said that, since the budget’s release, there had been significant interest in the downsizer superannuation scheme changes from both consumers and the superannuation sector.

“It is clear that the change to the scheme’s eligibility age has the potential to be a game-changer for many downsizers, including helping them to retire early,” Ms Graham said. 

“This could include someone who voluntarily decides to retire early, or like so many older age workers who have found themselves unemployed and needing to secure their retirement future.

“The change to the scheme’s eligibility age is good news for potential downsizers, who will now find it easier to release equity from their home and at the same time make a lifestyle change and move into housing which better suits their needs.”

“If anything it’s disappointing that downsizers will need to wait more than 12 months to access this benefit, as it’s such a great time to downsize now. However, in reality it does take time and a lot of forward planning to make this type of major financial and lifestyle decision.”

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