19th Jun 2014
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Reversing retirement
Reversing retirement

YOURLifeChoices no-nonsense financial planner Maurice Patane answers Bruce’s question about returning to work post-retirement.

Q. Bruce

I am 66 and retired a year ago, at which time I accessed the Age Pension and part super pension. I am bored and now have the chance to return to full-time work. What does this mean financially? Who do I have to report to? And will I be penalised?

A. You should be congratulated for getting yourself into a position of financial independence – having enough income so that you don’t worry about money. This is a position which many others envy. Believe me, I know.

You are also testament to the fact that behind every great accomplishment is a sound financial strategy. Quite often we fall in love with the idea of retirement, believing it is the ‘magic pill’ which will ensure we ‘live happily ever after’. We then cease work, only to find we have lost our identity and purpose, and as you say, become bored or even worse, depressed.

Personally I believe it is just as important that, when planning your retirement income needs, you also consider your retirement lifestyle needs. Think about how you will spend your time. Spend as much time on the right side of the brain – connecting with your hopes, fears, purpose and your emotional drivers – as you do with the numbers which ensure you will be financially independent.

Bypassing this ‘right brain’ step could see you going back to work, retiring and again being bored.

If we buy into the idea that we are to give and receive the most we can from our lives, then retirement at any juncture has new meaning and possibilities. In your case, you can afford to be more selective about the work you choose. In addition, you provide yourself with an even greater probability that you will outlive your money and have more options in your later years regarding your health, aged care and housing.

You should note that, under the Work Bonus scheme, you are able to earn up to $250 per fortnight of employment income, and it will not count as income for Age Pension purposes. Importantly, this is in addition to your superannuation pension. Interestingly, if you earn less than $250 in a single fortnight, the difference or unused amount is added to your Work Bonus balance, which can accumulate to $6500 and be carried forward across financial years.

Let’s say you earn $200 in one fortnight. This amount will be disregarded for Age Pension entitlements and the $50 unused amount will be added to your Work Bonus balance. You can then earn up to $300 in the next fortnight and again have this amount disregarded. Any income above the income-free threshold will reduce your Age Pension by 50 cents in the dollar for a single pensioner and 25 cents in the dollar for each member of a couple.

Of course, you will be required to advise Centrelink of your gross earnings and it will automatically deduct the correct amount under the Work Bonus before applying the relevant income test.

If your total income (assessable super pension and employment income) impacts on your Age Pension, you may consider reducing your superannuation pension by the same amount of employment income to provide a more favourable result.

Your superannuation pension will continue to be tax-free as you are over age 60, while your Age Pension and any employment income will be assessable. Speak to your accountant or adviser to determine whether you will be required to pay any tax, as there are tax offsets available.

Retirement should not be a cliff to jump from, but a journey through which you continue to map out what you like and don't like. There will be bridges in and out of employment, volunteering, and more.

Maurice Patane has been a financial planner for over 25 years. His experience has shown him that many Australians are not living the lives they dream of or wish for, which is often due to poor financial decision-making. Maurice is dedicated to helping everyday Australians take control of their financial future, so that they no longer have to worry about money.

Maurice Patane
Access Financial Management AFSL 229760
Ph (03) 9500 9988
Email: maurice@yourlifechoices.com.au 





    COMMENTS

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    Idontforget
    27th Jun 2014
    10:28am
    What is unfair about the Work Bonus Scheme is that it only applies to an actual wage earner. Take a small grazier, he is not entitled to it so therefore the land he owns sits there unproductive. Should he be entitled to it, the product he produces could have a GST benefit for the Government but it generates employment for others along the production line.
    The way the Work Bonus Scheme is framed favours those who are prepared to receive a wage but refuses those who have the infrastructure to contribute to the economy.
    Blossom
    27th Jun 2014
    10:45am
    If you pay GST for item relating to purchases, utility costs etc. you should be able to deduct it. If you aren't sure how to go about it, I suggest you ask an accountant for help in doing the initial paperwork and you may be able to do it yourself in future.
    If you know somebody else in the same situation they may be able to help you.
    Idontforget
    27th Jun 2014
    11:10am
    Of course you would be able to claim GST on acquisitions but when your net profit for the year runs over $4,200.00 (as opposed to $6,500.00 that the Work Bonus Scheme allows) the pension starts getting docked. And yes, this is accountants advice, not that of a lay person. There would be thousands in the same situation, that are encouraged to let infrastructure sit idle because they would be penalised when compared to those that are entitled to the Work Bonus Scheme provisions.
    mangomick
    9th Jul 2015
    10:42am
    Idontforget...I've been a small grazier and also a wage earner and as a wage earner I'm paying $40k a year in tax and as a small grazier with all the deductions I could claim back I doubt I would have paid hardly any tax. Is it any wonder the Government Work Bonus scheme favours the wage earner. Tax and GST wise you have been getting it pretty good compared to the wage earner so stop your whinging.
    OnlyGenuineRainey
    9th Jul 2015
    12:50pm
    The work bonus scheme is equally unfair to all self-employed, and the generosity of it highlights the gross unfairness of the tightened assets test which, in many cases, hurts those who cannot continue to work due to illness or disability or educational disadvantage, and really should be allowed to benefit reasonably from their past diligence and endeavors. Why is the government allowing those lucky enough to be able to earn generous incomes to continue collecting a substantial pension, yet depriving the disadvantaged ill, disabled, or educationally challenged who might have saved a few dollars in earlier life? It's wrong!

    27th Jun 2014
    10:35am
    TAKE a full time job, but do is as a volunteer, keep busy and lose nothing...if you want to work you do not have to earn anything.... become a member of a Volunteer Rural Fire Brigade, if in NSW... there will be plenty of things to do in some brigades that will keep you busy...not just fire fighting.....
    Blossom
    27th Jun 2014
    10:55am
    The Ambulance Services that are staffed by volunteers too, even if it is cleaning their office and garages or washing the ambulances. I had an Uncle who was a volunteer who after he had to give up driving used to wash the ambulances and check there was sufficient supplies of tea, coffee, UHT milk and plain biscuits there so that if they were needed for bushfires etc. they had plenty there for use when they had to go back to the service station to re-fuel. Their depot was only 2 streets away so one officer could run and put the kettle on while the other waited for the fuel pump and to pay by card for it. Even some stations in small towns within 1 hour drive of their capital city are run by volunteers.
    Blossom
    27th Jun 2014
    10:39am
    Maybe Maurice might be able to get part-time work rather than full time, something a lot of employers a doing now. Some are only employing people on a casual basis but you need to be aware that they then have to pay you a higher hourly rate. Maybe Maurice could consider doing some type of voluntary work. It doesn't have to be anything too physically demanding.
    It would probably involve you having to apply and pay for a Police Clearance Certificate.
    Staff simply don't have to time to stop and chat. Some feel guilty but if they do that another patient is waiting longer for the assistance they need.
    Some people in Aged Care Facilities or hospitals even though they are of very sound mind and alert never or very rarely get visitors. Many just want somebody to talk for converstaion to break the boredom. I have a relative who is an Enrolled Nurse at a Public Hospital, a friend who is a Registerer Nurse and another is a Carer at a different Aged care Facility. In each case they know the patients want somebody to talk to but they are all so under-staffed that they simply on the run the whole time except when they take their scheduled breaks (if they take their full entitlement). Another lass I know did her placement (work experience) at a nursing home and was caring for patients plus doing the medication run.
    By the time she finished one run it was almost time to start again at the beginning again. She got reported for putting eye drops in one patient's eye 15 minutes too early. At another facility while she was doing agency work she missed both her meal breaks so she finished work 15 minutes early. I was staying at her place and she came home hungry and exhausted. She was reported for that too. A friend of mine who lives interstate had major surgery. When I saw her a few weeks later she said the staff were marvellous and that she got excellent care. Her next comment was they were "flat out" and practically had to sprint between patients. She said if nurses were treated better instead of being understaffed. There simply weren't enough, particularly in high dependency where so many patients were being monitored frequently, some every 15 minutes max.
    Polly Esther
    27th Jun 2014
    12:44pm
    Whatever Bruce decides on, I wish him all the very best. Good luck pal and may you have a good one.

    27th Jun 2014
    12:56pm
    Pensioners can have an income of over $100 fortnight and it does not decrease the pension, I'm happy staying home, my little garden and the internet I enjoy, take the $2.50 ticket for the day on a train trip now and then.....so there can be things to do
    btony
    27th Jun 2014
    1:22pm
    Obviously he is not financially independent, he has his super and an age pension, and I find it a bit rude that a financial planner is giving him advice on how to wangle more money and still keep his pension . Why not increase his super pension and reduce his age pension? omg no, not that he wants to keep "his" money and use ours.Go volunteer, but it doesn't pay much except satisfaction
    RosePerth
    27th Jun 2014
    1:52pm
    I don't see the advice as ""wangling" more money. The rules are set in place to allow people to work on and reduce their pension accordingly. My retirement advice was the same and given to me by a Financial Planner at Centrelink itself. I retired and then went back to work a couple of months later 3 days a week. My pension is reduced so I'm saving "your" money - which, incidentally, I worked full time nearly 8 years past retirement age for.
    btony
    27th Jun 2014
    4:55pm
    Different scenario Rose, this his age pension guy is trying to keep all his age pension.I did say our money, not mine, its the peoples money, yours included, but I guess its ok if your doin it.
    FYI I worked from age 14 and had a modest sum in super which when the time came I chose to support myself with my super, because I believe if I can support myself ,I should. Centrelinks reaction to this ?
    'How noble of you', but I did it anyway
    Hawkeye
    9th Jul 2015
    1:11pm
    btony (is that short for Bloody Tony, you know, Bloody Joe's boss)

    Isn't that advice exactly what the Financial Planner is supposed to give? And wouldn't the law come heavily down on him if he did anything else?

    If you are telling the truth and are willingly forgoing your bought and paid for age pension, then god help you. You're going to need it.
    BUT, of course, I don't believe anyone is really that stupid.
    Anonymous
    9th Jul 2015
    1:54pm
    btony, if you are trying to appear as a real altruistic, do-gooding patriot it is not washing with any of the people reading your comments. Instead, your comments are those of someone completely out of touch with reality and living in a fool's paradise or playing a role in a comic-tragedy. If you think you are scoring points with anyone by using this absurdly benevolent logic you certainly are not, but you DO have me laughing! Keep up your philanthropic work, Joe will be proud of you and the money you save the government will buy him a couple of cigars.
    Young Simmo
    27th Jun 2014
    2:51pm
    PIXAPD, I am probably a bit like you, I find that being retired takes all day and there is no time left to do anything else. I also think I might have the most exercised strong index fingers in our street.
    Anonymous
    27th Jun 2014
    3:14pm
    Got up and went out to work each week from age 13...now I get up and stay in
    Heff
    28th Jun 2014
    8:42am
    I wonder if Bruce is a classic " Work to live" or "Live to work" example??
    Nadine
    29th Jun 2014
    2:02pm
    I have just finished reading through your Quarterly Retirement Newsletter, thank you.
    What I would like to know is what about those people who want to 'reverse retire' and what incentives there are for employers to take these people on.
    As I read it, the budget only applies to currently registered unemployed.
    Surely there should be some incentive for employers to take on those who want to reverse retire, including the APS (Aust Public Service).
    As pointed out in the Quarterly issue, 20 years has been insufficient time and inadequately addressed back then, for Super to be of long term benefit for those of us who have already past retirement age.
    I thank you for this particular article.
    Perhaps this is worthwhile YLC getting some feedback on this?
    I am in this category, am highly qualified, operated my own businesses for 30yrs, and no longer want this responsibility but am healthy, youthful, still capable of working full-time.
    A great 'tick' for all YLC contributors.
    Nadine
    Bes
    9th Jul 2015
    11:42am
    I (retired) at 66 in 2010 and became a Facebook and Foxtel tragic within 2 months.
    So I became a volunteer driver and also subscribed to Seek online and gained a casual job which I have done for almost 5 years. I did not have to pay any tax.
    This year (I'm now 70) I gained a part time position too so will have to see the accountant.
    I understand that both my wife and I will lose some pension but the rewards both financially and mentally far outweigh the small loss.
    I am also both very grateful for being healthy and fit enough to do this.
    There are many trades/jobs that take a physical toll through life which make my situation impossible. (I still go on FB and am an expert remote operator.)
    Young Simmo
    9th Jul 2015
    1:19pm
    I think the Australian Old Age Pension is tremendous. We save anything From $10 to $300 per fortnight, which is completely dependant on how many books my darling buys.
    OnlyGenuineRainey
    9th Jul 2015
    8:34pm
    This article highlights the gross unfairness of the recent changes to aged pensions. The privileged, who retain good health and are educated or skilled, can earn a healthy income AND have substantial assets and still draw a pension and receive all the attached benefits.
    The DISADVANTAGED sick, disabled, or educationally disadvantaged who CANNOT work, are savaged for having saved a little during their working life.

    It appears, Bruce can potentially earn $250 a fortnight. His wife can earn the same. They can have $300,000 invested and NONE of that income is counted in their pension assessment, so they can get a full pension and all benefits despite having a potentially very substantial income over and above the pension, and $300,000 in the bank. Bruce and his wife only suffer a $6500 a year loss for having an extra $100K in savings above the threshold, regardless of what investment return rate they can achieve.

    Conversely, a poor, disadvantaged retire couple who suffer ill-health or disability, cannot work, and face high medical and care costs and an uncertain future, but have $825,000 in assets - possibly resulting from years of going without a great deal to save to meet future expenses - and might be earning only $22,500 a year, but cannot draw a single cent in pension and are excluded from most pension benefits. A couple in similar circumstances with a little less in the bank is robbed of a whopping $15,600 a year for every $100K they have over the $375,000 limit.

    This is what LNP politicians, the Greens, and their blinkered or green-eyed supporters the misguided or vested-interest bleeding hearts claim to be ''FAIR''!


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