We talk with you quite a lot about the importance of planning for your financial future, because we are living longer, and we want you to be comfortable in your retirement. We will all be old one day, but will we all be pensioners? With early planning, including financial advice from a licensed practitioner, you can achieve “comfortable” self-funded retirement. This will secure yourself against any insecurity of future changes to the aged pension – the type of change we have recently experienced through our 2015 Federal Budget.
For those with retirement on your horizon, planning should be addressed at least five years prior to retiring, allowing suitable time for you to plan interactions and understand the social security income and assets tests and gifting/deprivation rules. And for all those “future retirees”, where you have the capacity to save for your retirement, you are advised to continue on your path to be a fully self-funded retiree, and not have to rely on the government.
One of the major changes to age pension announced during the federal budget is the reduction in the upper threshold to the assets test. Also, the maximum value of assets you can hold to qualify for a part pension will also be reduced.
Per Social Security assets test – current (20 March 2015 – 31 December 2016) Notes:
- Fortnightly pension reduces by $1.50 for every $1,000 of assets above the relevant amount.
- Cut-off asset values at which no pension is received may be higher if pensioner qualifies for rent assistance. Cut-off asset values are also higher for illness separated couples (or where one partner eligible
Per “proposed” Social Security assets test – proposed from 1 January, 2017 Notes:
- Fortnightly pension reduces by $3.00 (up from $1.50) for every $1,000 of assets above the relevant amount.
- Cut-off asset values at which no pension is received may be higher if pensioner qualifies for rent assistance. Cut-off asset values are also higher for illness separated couples (or where one partner qualifies)
Treasurer Joe Hockey assures that those who lose their pensions will be guaranteed access to the Commonwealth Seniors Health Card (CSHC) or a Health Care Card for those under Age Pension age. Although it’s not seen to be as generous as the pensioner concession card, the CSHC is an important benefit for many seniors, including self-funded retirees, as it provides the same concessional access to pharmaceuticals as those on the pension. To qualify for the CSHC your annual adjusted taxable income (ATI) is subject to a threshold income test (but there is no asset test).
Like many of these subjects, they are confusing. These proposed changes are set to come into effect on January 1, 2017. We know time flies, and the time to start planning was yesterday!
Please don’t hesitate to contact us, we can make an appointment to discuss your circumstances, and plan for your financial future.