Rising life expectancies, combined with ever-increasing costs of living and house prices, mean that more and more retirees are finding themselves asset rich and cash poor. One option is to downsize to a cheaper home, but this often has major disadvantages. If they are receiving a part age pension now, converting to an exempt asset – the family home – to an assessable asset such as cash or shares could mean a severely reduced pension or even total loss of the pension. To make matters worse, the cost of moving from one home to another is probably close to $100,000, which is a large loss of capital unless the move is essential.

As a result, many retirees take the reasonable view that they are better off to battle along in their present home which, if history is any guide, should continue to give them a reasonable tax-free capital gain.