John talks to money man Noel Whittaker about when to tell Centrelink about your reduced assets, as well as how to deal with Centrelink during these difficult times.
[00:04:57] John Deeks: [00:04:57] On YourLifeChoices website. This is Mind Your Own Retirement, our podcast. Always a pleasure to be able to speak to Noel Whittaker. International best-selling author on finance and investment expert, radio broadcaster, newspaper columnist, public speaker. He's done it all. He's one of the world's foremost authorities on personal finance.
[00:05:15] Noel Whittaker: [00:05:15] Thank you. That's just a lovely introduction.
[00:05:17] John Deeks: [00:05:17] Hello, Noel. Can I be your publicist? But it's all true and welcome to you, my friend. I hope you'll keeping well and keeping exercising.
[00:05:25] Noel Whittaker: [00:05:25] I'm exercising. Yes, I'm exercising. Keeping fit.
[00:05:28] John Deeks: [00:05:28] And you are a fit man and a very fit brain as well. Now, specifically on today's episode of Mind Your Own Retirement Noel, I'd like to talk about Centrelink and also about reduced assets. When should I be telling them?
[00:05:44] Noel Whittaker: [00:05:44] Well, I think it's important to understand that there's two tests. The assets test and the income test.
[00:05:50] John Deeks: [00:05:50] Yup.
[00:05:50] Noel Whittaker: [00:05:50] And they take the one that gives the least pension. And the deeming rates have no effect if your asset tested.
[00:05:59] John Deeks: [00:05:59] Right.
[00:05:59] Noel Whittaker: [00:05:59] So because all the deeming rates do is give you an agreed income which they use. Now if your asset tested your income doesn't matter. Right. So the deeming rates only affect asset tested pensions. But if your asset tested - Centrelink check the assets twice a year. I think in March and September, but you've always got the right to advise them, at any stage, that you’ve had a change in your assets.
[00:06:26] John Deeks: [00:06:26] For those of us who are not too sure, can you discuss with us the implications of the changes to the deeming rates?
[00:06:32] Noel Whittaker: [00:06:32] Ok what the deeming rates do is they assessed a notional rate on money, like superannuation, cash in the bank.
[00:06:40] John Deeks: [00:06:40] Right.
[00:06:41] Noel Whittaker: [00:06:41] Insurance bonds and shares and things, right?
[00:06:43] John Deeks: [00:06:43] Yep.
[00:06:44] Noel Whittaker: [00:06:44] Into different rates for singles and couples. If you go to my website, there's a deeming calculator.
[00:06:49] John Deeks: [00:06:49] Great.
[00:06:50] Noel Whittaker: [00:06:50] That explains it all in full and they can work out the deeming on your investments and then got to My Age Pension calculator and work it out. It's just a notional figure to try and put some sort of earning rate on your investments because what needs to happen is, in the old days – well 20 or 30 years ago. If you had shares, they would assess you on the capital gain that they had in the last year.
[00:07:16] John Deeks: [00:07:16] Right.
[00:07:17] Noel Whittaker: [00:07:17] So your shares may have gone up 30% last year and then been hitting the 30% and then they might be down. So, a deem value is just much fairer. That's all. But see every hundred thousand of assets, is worth almost eight thousand grand a year of pension. So, if your assets drop by $100,000 because of the market. Then you get another $8,000 in your pension. Also, if you’re over the limit,
[00:07:45] John Deeks: [00:07:45] Yeah?
[00:07:46] Noel Whittaker: [00:07:46] It might just take you under the limit and make you eligible for an aged pension and again all those numbers are on my website.
[00:07:51] John Deeks: [00:07:51] I was going to say, go to noelwhittaker.com.au or just go to YourLifeChoices and that'll give you a link straight through to Noel. And also, Noel does write for YourLifeChoices and gives answers to our members on financial questions. You must be getting so many queries now. What are say, the two or three of the biggest queries Noel Whittaker is receiving through your radio, your press, your other media commitments?
[00:08:17] Noel Whittaker: [00:08:17] I think the big ones are, should I go to cash now until it's over? As Warren Buffett said, by the time you see a robin – spring is here. You know, history tells us nobody can pull cast the top and bottom of the market.
[00:08:35] John Deeks: [00:08:35] No one rings a bell.
[00:08:37] Noel Whittaker: [00:08:37] No, so you keep two or three planned expenses in cash and leave the rest be. But I must say now being in forced isolation - we just don't spend anymore. Nothing to spend it on.
[00:08:53] John Deeks: [00:08:53] Yeah. That's right.
[00:08:54] Noel Whittaker: [00:08:54] I think, so that's the first one. The second one is on the bank guarantee is a big run. But what a lot of people don't understand is that your assets such as furniture and cars are valued at knocking out value. So, a lot of people might put $60,000 on their furniture because that's what it’s insured for.
[00:09:17] John Deeks: [00:09:17] Yeah.
[00:09:18] Noel Whittaker: [00:09:18] But if you put that on the go on a wet Saturday morning that might be worth about $5,000. So it's important to make sure your furniture has five thousand valuation max, and your car is at second hand value.
[00:09:35] John Deeks: [00:09:35] Noel, you're a gem. We thank you so much, noelwhittaker.com.au is a place you can go to or go through our YourLifeChoices website, and you'll get a link to that. Noel also, is very generous in answering questions to our members as well. Mate, you take care, you be well, and everything's on your webpage, including all those calculators that you mentioned.
[00:09:58] Noel Whittaker: [00:09:58] Anytime.
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