Debbie McTaggart helps you to navigate the pitfalls of working past 65 years of age
I am 63 and hoping to transition to retirement from full time work, but as my retirement nest egg is so low, I will need to work for a long time yet! So, what is the situation with older workers and the Age Pension? What entitlements are available? Can I continue to pay super? Am I simply destined to work forever?
A. Pauline, many Australians have seen their super balances fail to meet their expectations. During transition to retirement (TTR) it is possible to arrange your finances in such a way that you can reduce the hours you work, without actually reducing your income. TTR allows you to access your superannuation savings before retirement age by taking advantage of specific taxation rules for this life stage. This can be complicated so it would be prudent for you to meet with a licenced, independent financial planner who can advise you of your options.
Given your current age, you are not eligible to apply for the Age Pension until you reach 65. Once you have reached 65, you can claim the Age Pension as long as you meet the eligibility criteria. This includes an asset and income test and residency requirements. You can view the current income and asset limit tables by clicking the links below:
Asset limit table
Income limit table
As you intend to work beyond the age of 65, you are entitled to the Work Bonus which reduces the amount of income on which you are assessed when claiming the Age Pension. Under Work Bonus rules, the first $250 you earn each fortnight is not assessed. Any unused allowance will accumulate in an ‘income bank’ up to a maximum allowance of $6500 per annum. This may assist with your eligibility to qualify for at least a part Age Pension. Find out if you will be eligible for the Work Bonus.
Should you qualify for a part Age Pension, this will entitle you to a Pensioner Concession Card (PCC) which gives you access to reduced-cost medicines, and state and territory government concessions such as reduced water rates, vehicle registration and energy bills. You can find out more about the PCC here. Also, if you are no longer working full time, you may be entitled to a Seniors Card. The eligibility requirements and concessions available for a Seniors Card vary between states and territories, but include transport concessions and discounts from many local businesses. For more information on how to apply for a Seniors Card, contact your local state or territory office.
Changes to superannuation rules have removed the upper age limit for the superannuation guarantee, so any employer will have to continue to pay into your superannuation fund for as long as they employ you. However, there is an age limit on concessional and non-concessional contributions, which is currently 75 and you must meet a work test if you are over 65 to make such contributions. Also, in the 2012/13 Federal Budget, new concessional contribution limits were announced if you have a super fund balance of less than $500,000. To clarify your position on super, you should consult an independent financial planner. If you do not already have one, you can locate one near you by visiting the Financial Planning Association.
Pauline, hopefully this gives you an idea of where you can find the information you need to make the decision on how much longer you need to continue working. You may also wish to download a copy of the Centrelink publication, About to retire or in retirement?
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