Last year, I put together a retiree checklist. In 2021, there are some additions. This is a long list and not everything will apply to you, but it should help you organise your retirement.
Managing your risk
If you deal with a financial adviser, check their credentials using the ASIC Financial Adviser Register. If they are on this list, they will have a bunch of obligations including being a member of the Australian Financial Complaints Authority (AFCA). One of the biggest fraud stories of 2020 involved an unlicensed financial adviser, which means no compulsory insurance and potentially no recourse through the AFCA.
If you delegate authority to your adviser to transact on your behalf, make sure you have your own logins to your accounts so you can also see what is going on. That same fraud story involved clients relying on fake statements.
If you manage your own superannuation, it may be a good time to review other ways of managing your savings. Understand the difference and familiarise yourself with the responsibilities of managing your own superannuation. There is a massive amount of responsibility and administration required that may be better organised by a big company that is probably offering better and cheaper service than was available when you first decided to manage your super fund yourself.
Applying for the Age Pension or Commonwealth Seniors Health Card
1. In July 2021, the Age Pension age will go to 66.5, which is confusing if this is the year you turn 66. If relevant for you, make a diary note to look closely at the Age Pension application process 12 weeks before your actual birthday so you can address any hiccups well in advance.
2. As soon as you receive your Pensioner Concession Card, start applying for your entitlements (see below for the top five).
3. If you are turning 66 this year, and you are not eligible for the Age Pension, make sure you know why so you can get ready to reapply if your circumstances change.
4. If you are turning 66 this year, and you are not eligible for the Age Pension, then apply for the Commonwealth Seniors Health Card (CSHC). This card is income tested and could save you more than $2500 on healthcare costs. Low income returns on investments and changes in deeming rates mean that your eligibility may have changed.
If you are already receiving a part pension, make sure Centrelink is up to date with the right data. For part pensioners, a change in assets of $1000 could mean an extra $78 per year in Age Pension payments.
Check that the right value for your car or caravan is in the system, and check that household contents are realistically valued. These assets are means tested and can be the difference between receiving a pension and not. Your savings may have changed due to a holiday, renovation or medical emergency.
1. Easily update income and assets by accessing Centrelink
2. Check your Medicare claims and track your safety net threshold by accessing Medicare
3. Complete your tax at the press of a button (or two) using MyTax
4. Start collecting your health data for easier use via My Health Record.
Check on your entitlements
1. If you receive an Age Pension, make sure you are receiving these five entitlements:
- gas rebate
- electricity rebate
- water rebate
- council rate discount
- driver’s licence and registration concession.
2. If you are in NSW and hold a CSHC, check the Seniors Energy Rebate. You need to reapply for this each year (this is not for age pensioners).
3. If you are in NSW, hold a CSHC or receive an Age Pension, and live in a regional area, apply for this year’s $250 Regional Seniors Travel Card.
4. Travelling by public transport in NSW? If you want to make the most of government transport help, take a look at the following: Pensioner OPAL Card, Pensioner Travel Vouchers, Country Pensioner Excursion Tickets and Regional Excursion Daily (RED) Tickets.
5. Search for entitlements, concessions, rebates, programs or whatever they are called. I have more than 40 and counting on my list. Policies change, federal budgets have announcements – it’s a moving feast. Everything from replacement appliances, fishing licences, pet registration and stamps. And from all levels of government and in different departments.
6. If you are part of a couple, ensure you are registered for the Medicare safety net as a family or couple. Pensioner Concession Card or the CSHC holders get access to Concessional Medicare Safety Net thresholds, making this one a no-brainer.
Making and adjusting your plans
If you are trying to work out whether your savings will last, try the ASIC Moneysmart Retirement Planner. It’s better than many of the services provided by for-profit companies as it includes Age Pension eligibility and works this out over time.
Working and the Age Pension
If you are turning 66 or over, and are working, do not assume you cannot receive a part Age Pension. For someone with a small amount of savings, and a low-income job, there may be benefits from knowing what is changing.
Fine-tuning your investing
1. If your investments are hard to track, hard to organise or you cannot link your investment strategy to your retirement plans, it might be time to consolidate and simplify. There is a link between asset allocation strategies and expected returns. ASIC explains it here.
2. Australians in later life are more likely to invest at the conservative end of the spectrum using the reliability of returns in a diversified portfolio. Use these expectations, an understanding of spending, and expectations of government support as the basis for long-term retirement spending plans. A long-term plan should be easy to hang your hat on with the discipline in regular reviews to make sure the plans still make sense. Allow for medical emergencies, aged care, sudden yearning for travel, urgent house upgrades and maintenance, bailing out a child … the list is endless.
2. If you are eligible for an Age Pension at $0, you can apply for the PLS. Wait a minute? What does this mean? It means that you can apply for a loan even if you are a self-funded retiree. This may suit people with illiquid assets that stop them from receiving an Age Pension, who may be cash poor. People with income streams that prevent them qualifying for a pension (via the income test) may also apply for a top-up. The government is keen for you to tap into your property value to support your spending in later life.
A look back on what happened in 2020 lays out the themes for 2021:
1. The government wants you to go digital. As hard as this may seem to get set up, once you are there you will not want to go back to queues, call waiting and uncertainty. Information is available and easily updated and this should be a key focus in 2021.
2. Large companies saying one thing and doing something else is a problem, and they can be difficult to contact. Independent advice will help you set up in your best interest.
3. Low interest rates, unpredictable markets, long lives, uncertain future expenses … it’s a balancing act. Putting all the elements together takes work but is worth it for the peace of mind.
Are there other services, programs and rebates that you have found useful?
Brendan Ryan is a financial adviser and founder of Later Life Advice. This article has been reproduced with his permission. It first appeared on firstlinks.com.au. It is for general information purposes only and does not consider the circumstances of any person.
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Disclaimer: All content in the Retirement Affordability Index™ 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.