Delaying applying for the pension? It could be a costly mistake

Are you missing out on Age Pension entitlements?

Missing out on the Age Pension can be the biggest financial mistake of your retirement, but working out what entitlements you are eligible for can be confusing and overwhelming.

Superannuation support and advice group SuperEd has found that single retirees are on average losing $37,000 in entitlements due to delays in applying, while couples are losing about $60,000.

Read: Pension overhaul needed for older Australians to return to work

According to SuperEd, retirees put off applying for the pension due to a number of reasons including assuming they are ineligible, procrastination and a misplaced sense of shame because they don’t want to rely on the pension.

SuperEd said it considered procrastination the most serious concern.

“Many people put the application aside as they don’t want to deal with Centrelink or perhaps because they don’t understand that every week they delay is costing them money,” the group said in a statement.

“For a single person eligible for a full Age Pension the loss per week is close to $500.

“To compensate for the loss of the Age Pension retirees will be forced to deplete other savings – including their superannuation – which will materially affect their retirement.”

Read: Seven tips for living well on the Age Pension

According to SuperEd, 70 per cent of Australian retirees are eligible for a full or part pension.

“With so many Australian eligible for the Age Pension, the bulk of whom will have it as the main source of their income, super fund trustees should be doing everything they can to ensure members get access to the Age Pension as soon as they are eligible,” the group said.

AMP said another big fail is not taking care of your superannuation.

Research your options, do you want it as a lump sum or annuity? Spend a little time before you retire choosing your preferred payment method.

Read: How your superannuation affects the Age Pension

AMP also recommended against rash spending decisions such as expensive holidays, a new car or even giving money to your children, all activities that can quickly whittle away savings.

Retirees are also advised to recalibrate their budget, as unless you have oodles of cash, spending like you are still working can quickly drain your superannuation account.

And while economising to make your superannuation last makes great financial sense, AMP said insurance is one area where you should not cut corners. According to AMP, more than 63 per cent of AMP insurance claims were made by people aged over 50.

Did you put off applying for the Age Pension? Why not share your experience in the comments section below?

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Written by Jan Fisher

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