Centrelink Q&A: When is the best time for my wife to retire?

Font Size:

David’s wife is considering retiring soon, but he wants to know how to get the timing right.

Q. David
My wife is presently on long service leave at half pay. She will retire very soon. Is it better to retire before the end of the financial year or at the beginning of the new financial year? We have received different answers to this question, and some say it doesn’t matter.

A. There are a number of different factors to consider when timing your retirement. Some people do not have a choice, finding themselves out of work before they reach retirement age, whereas others plan to retire on the day that they become eligible for the Age Pension.

One of the first decisions your wife will have to make as she approaches retirement is what to do about her leave entitlements from your employer. If she is taking her long service leave, she may want to consider taking the rest of her leave as well. There are two reasons why this is a good idea.

First, if she has a considerable amount of leave accrued with her employer, she can continue to earn extra leave while taking her break.

Second, her employer continues to pay superannuation into her account while she is taking whatever leave entitlement she is owed.

If she would instead prefer to take her leave entitlements as a lump sum, then she will have to think about timing her retirement appropriately. The reason is the tax man.

If your wife retires before the end of the financial year, her lump sum leave entitlements will be added to her earnings and could potentially lift her into a different tax bracket. This could result in her owing the Australian Taxation Office money when she completes her tax return.

The alternative is to retire early in the new financial year, and to try and keep her earnings down so that her leave entitlements attract the lower tax rate, making a big difference to the way she starts her retirement.

Disclaimer: All content on YourLifeChoices website 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 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 Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.


How does Centrelink assess the UK Pension?

Mike receives a UK age pension and wonders how this payment is treated by Centrelink.

Can you reapply for the widow’s allowance?

Corinne lost her widow's allowance when travelling overseas. Can she get it back?

Can I still receive an Australian Age Pension living overseas?

Learn more about claiming your Age Pension when you go to live overseas.

Written by Ben


Sign-up to the YourLifeChoices Enewsletter

continue reading


Are over 50s being 'treated as second-class citizens' on vaccine?

YourLifeChoices has received numerous queries from members asking why over 50s "are forced to use the AstraZeneca vaccine and not...

Finance News

Get set to tighten your belt with series of price hikes forecast

Get set to tighten the belt in coming months with news that retailers are set to increase their prices across...


Do you get the winter blues? Here are the SAD symptoms to look out for

I think everybody can say they've felt tempted to stay curled up on the couch with a mug of something...

Mental Health

Do you get the winter blues? Here are the SAD symptoms to look out for

Seasonal affective disorder (SAD) is a type of depression that's tied to the change of seasons. SAD starts and ends...

Age Pension

Does living in a granny flat, caravan or boat affect your pension?

I'm often asked about how different living arrangements can affect your Age Pension. Let's look at some of these different...


How to boost your gut health and immune system this winter

A healthy gut is key for overall health, and affects so much more than just our digestion. With links to...


Things people who grew up in the '70s will remember

If your childhood or teen years happened to fall in the 1970s, you probably have a lot of fond memories...

Food and Recipes

The favourites that send food lovers pie-eyed

Pies, pies, pies. For some of us it's the flaky pastry and gooey filling. For others, it's the firm shortcrust...