If you are on a full or part age pension, are you aware that there are some significant changes due to commence this month?
These changes will affect many pensioners who are asset or income tested and some people are likely to lose all or part of their pension.
However, if you are currently receiving the maximum rate of pension, your payment won’t change.
While the asset test levels will rise at the lower end, meaning that people can have a higher level of assets than previously and still receive a full pension, the level will fall at the upper end.
This means that some people who were receiving a part pension will either lose it, or have it substantially reduced.
However, there’s another change that will be a sting in the tail for many people on a part pension. It’s called the Taper Rate. Currently for every $1000 in assets that a couple owned over and above the minimum asset level required to get a full pension, they lose $1.50 per fortnight off their maximum pension entitlement. From January 2017, this figure will double to $3 per fortnight for every $1000 a home-owning couple has over and above the new $375,000 threshold.
The threshold figures are different for couples who are not homeowners and for singles.
If you are on a part pension, it might be a good idea to talk to a Centrelink financial officer, a financial planner, your super fund or an accountant to find out if you will be affected by these coming changes. It may be possible to do some restructuring which could reduce the level of pension cuts that you may otherwise suffer.
The other point I suggest you consider is that there’s more to planning your retirement than just thinking about organising your money. If your relationship is strained, or your health is poor or you’re bored and lacking a purpose in life, having enough money isn’t going to make you happy.
Retirement can lead to some of the best years of your life, but like most things that are worth having, you need to do some work to make a long term success of it.
You can find out more on our web site at www.mylifechange.com.au