How to maximise Age Pension payment

Carley seeks help from Noel Whittaker to structure her finances and receive maximum pension benefits.

How to maximise Age Pension payment

Carley* will be of Age Pension age in February but is already thinking how the couple’s finances can be sorted to gain the biggest pension payment possible. She asks personal finance specialist Noel Whittaker for help with the numbers.

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Q. Carley
I am 65 and about to apply for the Age Pension, so that I can receive it next February when I turn 66. My husband is 63 and will reach Age Pension age in March 2022. We are both now retired and living off my husband’s superannuation. My superannuation is already used up.

We have paid off our small unit (our home) and our caravan and two cars. We have no debts.  That is all we own. My husband’s super is $380,000 at present.

 We will need around $80,000 this year to do some renovations on the unit and buy a new car (mine is 20 years old), so that would leave around $300,000 in my husband’s super when I apply for the pension.

We are currently receiving an income stream of $2000 per fortnight and we will like to stay on this amount. I want to receive as much as possible from the Age Pension.

Should I reduce the amount to $1000 per fortnight and withdraw the other $26,000 in a lump sum each year (to make up the current yearly figure in cash and keep it under the mattress to pay the bills when they arrive? This way under the income test, I would receive more each fortnight.

 


We don’t have private health cover but are both in good health and expect (hope) to live to around 85 years.

It is hard to know what to do and any guidance would be appreciated. Thank you.

A. The major issue appears to be whether your husband’s superannuation is in accumulation mode or pension mode. If it’s in pension mode, it will be fully assessed by Centrelink; if it’s in accumulation mode it will not be assessed until he reaches pensionable age. I suggest you take advice and have someone do the numbers to ensure you are maximising your position. It would appear you are more likely to be asset tested than income tested.

Do you have a question for Noel? Send it to newsletters@yourlifechoices.com.au and put Noel Whittaker in the subject field.

* Not her real name.

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature, and readers should seek their own professional advice before making any financial decisions.

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Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.





COMMENTS

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ozrog
13th Nov 2019
10:16am
Make an appointment with a Financial counselor at Centrelink as tgey are the only ones to give you the correct information and they are very helpful.
A good financial planner or super fund will advise you to do this as they do not know centrelink policies as well as the centrelink financial counselor.
Spud
13th Nov 2019
10:25am
This is a great piece of advice. I used them in house a few yrs ago and found they actually worked on a problem to my advantage
Mariner
13th Nov 2019
11:21am
Made the same experience with the C/L Financial Councillors at their offices. They ran information seminars and before we retired we went to get the nuts and bolts. Of course they would not agree with Carley's idea of putting the lump sum under the mattress, LOL.
ozrog
13th Nov 2019
11:27am
Mariner the government blamed retires for the missing $100 notes in circulation. Maybe they are under mattresses with the terrible tem deposit rates and centrelink high deeming rates. Lol
Mariner
13th Nov 2019
11:49am
Well, ozrog, was in Singapore earlier this year, needing to change some money for stuff, went to a forex shop near the hotel we were staying in. He gave me the required $150 Sing dollars but was I surprised to see a stack of Aussie 100s, about 1 foot long in his drawer. Could be that's where a lot of those notes are - some place in Asia. Sure we have some as well for emergencies. They are so rare that I tend to keep them a bit longer when I get one.
ozrog
13th Nov 2019
11:57am
Mariner you are probably right. I don't carry cash when OS my citi bank debit card works fine. Lol
Chris B T
13th Nov 2019
11:19am
Really, $52000 a year.
OAP per couple is $36556 per couple.
Claim what ever you like, but Really this is over the Top.
Sundays
13th Nov 2019
3:46pm
It’s all relative. I have friends who ‘get by’ on $80,000 for a couple. When they mentioned this at dinner, others who are not yet retired thought it was too low!
ozrog
13th Nov 2019
3:53pm
$80,000 to low your joking I've never earnt that ever in my life try halving that. Geez there are some rich people on here.
Chris B T
14th Nov 2019
9:07am
These "Friends" are they Claiming OAP/Part OAP.
This is about Claiming OAP/Part OAP, if the need to claim more than 2 single OAP spending is the Problem.
Most on this Site would love 2 single OAP instead of Couples OAP.
{;-(0)
Sundays
14th Nov 2019
9:59am
You can still qualify for a small part pension if you have income less than $ 81,172 per year for a couple. This would be the case for many retired Public Servants including, teachers, nurses, police officers and military personnel who are assessed under the Income rules. No need to rort by claiming two singles. I make no judgement as to the rules, but pensioners are far from a homogeneous group.
Sundays
14th Nov 2019
10:03am
Plus, you can earn up to $300 per fortnight from working which is not counted by Centrelink in the income test
Chris B T
14th Nov 2019
12:48pm
OAP couple Rate is $36582 and if You Add $300 a fortnight it is $7800
The sum of both is $44352.
Well below 2 singles $48536 and this didn't include extra earnings.
If you say there doing it "Hard" how is this homogeneous with pensioners on basic rate.
{;-(
Sundays
14th Nov 2019
3:35pm
It’s not! Of course they aren’t doing it hard. My point is that some People on part pensions are quite well off, and for them $52,000 per year is not over the top
Paddington
15th Nov 2019
9:36pm
ozrog, I have been saying that for ages. There are pensioners and then there are the other pensioners.
Full couple pensioners are on $34,000 per year. People on an additional $300 a week would be having a different lifestyle. Then there are the renters and the single renting pensioner would be most hard up.
So there is a range of wealth or lack Thereof across the retirement years.
Running two cars seems extravagant and unnecessary. We do fine with one.
Owning your own home is an advantage even if that is all you have.
Dining out, drinking, etc. would be out for many pensioners.
If you are keeping your head above water then life is good though!
KSS
13th Nov 2019
12:18pm
I think this couple are going to fall back to earth with a bump!
East of Toowoomba
13th Nov 2019
12:26pm
A $15,000 p.a. top up from his Super should last them to the end and leave some for the kids too. I don't think they'll have any trouble.
ozrog
13th Nov 2019
3:57pm
Never leave kids anything they can earn their own after suppoting them till they srarted working. Your just making them lazy by letting them know you will continue to support them when you are dead. I've told mine I'm spendind their inheritance. They will have my house it thats it.
Paddington
15th Nov 2019
9:39pm
ozrog, I think a lot of us only have our home and we do not manage overseas holidays. Visiting the grandkids is the holiday of choice and means for the basic pensioner couple.
Renting pensioners would have no holidays I imagine.
johnp
13th Nov 2019
2:20pm
Poor response by Noel
Jimbo
13th Nov 2019
2:35pm
Unfortunately Noel does not explain how she can maximise her pension. Once again we get the tired advice to consult her planner...she obviously doesn't have one hence the original poorly answered question. Why can't he give a proper detailed answer and some general advice for someone in her situation? C'mon Noel Don't be so economical with your knowledge.
Sundays
13th Nov 2019
3:42pm
How to maximise Pension Payments. Noel’s advice - ask someone else! However, he is right in that if your husbands Super is in accumulation mode it won’t be counted for the Asset test until he reaches Pension age. You should qualify for half the couples rate plus the benefits and discounts. It’s quite short of the $52,000 you are living on at present, so yes you will have still have to dip into his Super. See a Centrelink Financial Officer but don’t expect to outlive your Super because at some point it will run out
old frt
14th Nov 2019
11:07am
Best to reduce his income stream to the 4% minimum draw down (if you take more income you get less OAP )and make lump sum withdrawals for extra income and then go to centre link ,just in case you don't get a friendly C/L officer . You should get about $650 /fortnight pension ( based on 1/2 couples pension) and $470 /fort. income stream and then do annual lump sum withdrawals (at around rates and strata time ) and then deposit what is left in the mattress bank. Always good to have a little something they don't know about.
Good luck
Skiing
15th Nov 2019
3:39pm
Anyone newly applying for pension will have the deeming rates applied to the balance of the income stream so the actual drawings are not treated as income. Can move super back to accumulation to increase the age pension but the trade off is the earnings in the fund are taxed at 15% compared to no tax in pension mode


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