News and Articles

For many retirees, home is where they want to be – to be part of a community,  to stay connected to friends and family, and to enjoy their independence.  If you’re thinking about what the options are for you to continue living where you are, you’re not alone.   With some planning, and the right resources, you can continue to live comfortably at home, knowing you have support when you need it. Australia’s aged care system is undergoing significant reforms, reflecting the strong preference of older Australians to remain in their homes as they age.  The upcoming ‘Support at Home’ program is set to replace existing home care schemes by July 2025, and aims to make it easier for people to access tailored support services that fit their needs. Let’s explore how government programs, financial strategies, and even small home improvements can help you create the retirement lifestyle you really want..

The income test forms a major part of your likelihood of receiving an Age Pension. That’s well-known and the thresholds are quite clear. Which income is included and which is excluded can be more complex, which is why we covered this topic in some detail in recent articles. But many reader comments highlighted yet another level of detail when it comes to retirees and their income. You would probably assume that the method Centrelink uses to calculate your eligibility, based upon income, would be the same regardless of the entitlement. But no, this is not the case. Here’s how Ryley Brito, Technology Product Officer, explains it in a brief Q and A sparked by a member’s need for clarification:

This week the spotlight is on Sharon Sheehan and the way that her financial advice can make a big difference to the income of our members. 

One common mistake Sharon has noticed is how many members are confused by the term ‘superannuation account’. Recent research from AMP suggested that 70 % of older Australians don’t know what an Account-Based Pension is. Given that this is the most common mechanism for Australians to withdraw funds from their super account, this could be considered surprising. But Sharon didn’t think that was necessarily the case. She believes that much of the confusion comes when super funds give different names to their  Account-Based Pensions, for instance FirstChoice ( Colonial First State) or Retirement Income Account (ART) or Choice Income (AustralianSuper). It’s not exactly easy to discern that this is your own super, in draw-down mode. And if it’s not that easy to distinguish this as an income stream, this might lead to misreporting when you decide to apply for any government entitlements.

Another aspect of retirement income that Sharon thinks is not well understood, is how Centrelink views the super savings of both members of a couple. Just because you haven’t reached 67 doesn’t mean that the rules won’t apply. The Centrelink assessment of super for those below Age Pension age is well worth understanding when considering your retirement income needs.

At 69, Bill was working part time, earning around $46,000, while managing two debts: a $30,000 loan due in five years, and an $80,000 loan over 12 years.  What Bill didn’t realise is that he was eligible for $14,000 per year in Age Pension support whilst continuing to work. When I met with Bill we worked out that with a boost from an Age Pension entitlement, he could clear his smaller debt of $30,000 in just two years. 

Once that’s paid off, he’ll be able to focus on reducing the remaining $80,000 loan more quickly.

We looked at the pros and cons of using a lump sum payment from his superannuation to help see the impact of these options on his retirement savings.

Bill is looking forward to travelling in his camper-trailer and spending more time catching up with friends and family.  He’s still enjoying the work at the moment but wants to take some leave and enjoy a full month off each year. He now has increased confidence that his debts can be managed and an exit from working is possible in the near future.

The bad news is that, by delaying making a claim until age 69, Bill has missed out on two years of Age Pension payments.  This is roughly $30,000, which would have been of great assistance with reducing his debt.  There are many others like Bill who are still working and self-reliant and don’t think to ask for help or realise they are now eligible for some Age Pension payments.

It’s generally agreed that retirement is not a ‘set and forget’ proposition. On the one hand this can sound as though we need to continually monitor our situation. But the flipside of this is that it is literally never too late to change our settings and improve our situation. What do I mean by this? Simply that there are different trigger points and decision times across a full retirement journey. Knowing how these work is therefore key to making the most of your savings.

Today we look at three different retirement ‘ages and stages’ through the goals of a typical couple and consider some of the ways they might use a trigger point to rethink and reshape their retirement. These stages are:

Age 65,

Age 67 and

Age 75.

In mid-October we reported on the second part of the Means Test – how Centrelink assesses income. In this update we explained how the income test works, what is ‘earned’ income and what is deemed. We then asked you to share any aspects of the income test that might...

Recent findings about the Australian retirement income system show it has taken a small hit in world rankings. A small hit is not a catastrophe, but it does offer a cautionary warning that there may be better ways of helping retirees to help themselves. What are these findings? And how can they be used to improve the way the Age Pension and super combine?

The Mercer CFA Institute Global Pension Index 2024.

Mercer is a global financial services organisation which has conducted research for the Global Pension Index since 2009. It partners with the CFA Institute (Chartered Financial Analysts) to collect information from 48 different nations and analyse these retirement systems statistics for adequacy, sustainability and integrity. National retirement income systems can vary widely, so the Global Pension Index provides a very helpful ‘health check’ to participating nations – and their citizens. Dr David Knox has headed up the Mercer Index for 16 years and he generously shares his insights for Retirement Essentials’ members to better understand what these global rankings mean for individual retirees.

Two weeks ago we explained how the assets test works and how different assets can be treated very differently by Centrelink. At the end of this article, we asked if you find these rules confusing and you certainly answered – in the 70 comments which followed.

Because there are so many different rules, it’s impossible to cover each and every instance. But given the many different types of assets that people may own, today we wanted to share some of the specifics on investment properties, foreign pensions, household contents, exemptions and more. Here are the answers that our team (led by Guru Steven Sadler) gave to questions on these concerns.

Your retirement age is a very personal thing.  Sometimes retirement is thrust upon us.  We might lose our job or be forced to leave work due to ill health or caring responsibilities.  Most people, however, are in the fortunate position of being able to choose when to retire.  

The many people I have talked to on this subject usually put the decision down to one or two key factors.

‘I want to keep working while I still enjoy my job, while I am still able to do it well and feel productive’ 

‘I want to retire as soon as I can afford to do so’

The first reason is extremely important.  You are a long time retired so feeling productive and that you are making a difference matters to a great many people.  But you don’t necessarily need to keep working to achieve that.  Hobbies, time with family and volunteering are just some of the many ways people can feel they are making a contribution. And others just relish the free time to do more of what makes them happy.  Just as there is no need to retire if you are happy and love your job, there’s also no need to keep working in a job you dislike if you can afford to do something else.

A recent article (How fair is the Age Pension) prompted quite a few Retirement Essentials members to share their (not-so-good) experiences of downsizing.

Here’s what you told us (edited for reasons of space):

Helly says no way!

Does your comment that ‘they *CAN* downsize’ …take into account the fact that:

there are almost no suitable residences available to downsize to, in the first place 

the massive cost of actually moving house – particularly if you are older / unable to lift and move things yourself and have ZERO relatives to help you – meaning $$$$$ to pay someone to move everything and 

the massive amount in Stamp Duty plus real estate agent fees plus the cost of doing any repairs required and the cost of modifying the residence you are moving to? 

It is simply not worth the cost of moving – that is why older people stay where they are! You end up losing a lot of money moving, then you have an asset worth less – so your options for reverse mortgaging have decreased dramatically. 

Robyn agrees:

Amen! I ‘downsized’ to purchasing land and building a smaller house with two bedrooms plus a smaller sewing/single bedroom. The cost has been astonishing, as delay after delay has stretched out to 19 months and still not completed. Storage fees, accommodation and other associated costs have made the ‘downsizing’ an expensive nightmare. I cannot apply for a part-Age Pension until final costs are calculated because of daily changes. 

Editor’s Note: If Robyn is eligible for a part Age Pension she should apply immediately and then update Centrelink as her circumstances change. Not doing so will mean she misses out on any Age Pension she is currently eligible to receive.

And Christine feels trapped with two properties instead of one

I am in a similar position. I am stuck with an unfinished house (downsizing), am paying two lots of rates, electricity and water, and living off my savings (fortunately I have some), drawing down my super, but cannot get any pension because the house I am building is deemed ‘an investment’. This build has been going for four years and the builder appears to have no appetite to complete it and there is no redress to this.

These comments caught our attention as they share the very real experience that downsizing has meant for some retirees. And yes, there can be a tendency for those in financial services to suggest downsizing will solve a lot of problems in retirement. And while it is true that leveraging the value of your primary property may translate into higher retirement income, the way you go about downsizing can lead to good – and bad – outcomes. Things can go well, but they can also go very wrong. Today we explore what happens in the latter situation.

But first, a cautionary note – the following overview is not a suggestion that you should not downsize. It is an attempt to share some of the pitfalls of downsizing, so that you can learn from the mistakes of others and avoid them! Downsizing can work very well – but you need to do a lot of homework first.