News and Articles

Last week we revealed a little known fact about the Age Pension – and that is, how very unfair the asset test rules are for renters and single renters in particular. We had a lot of media attention following the publication of this Age Pension anomaly. Our team has also had a lot of feedback on how this works. We’ve read your comments and had discussions about whether this inequity needs urgent attention.   Our conclusion is that yes, the Age Pension rules do need to be altered – urgently – to ensure that all older Australians who apply for the Age Pension are treated equitably.

There are many ways of saving for your retirement.  You can pay off your home, put money into super, an investment property or managed funds. Perhaps invest in art, cars or fine wine.  I’m not a big fan of those last three, unless you have real expertise in the field, but some people do it. 

There are pros and cons to each of these and many people combine them to help ensure a financially secure retirement.  Owning your own home and having money in super is a really good combination as both have tax advantages.

But what happens if you decide to put all your savings effort into just one of these? Centrelink will treat you very differently and could give you a different Age Pension entitlement.  Here’s how it can work.

Federal Budgets can seem a long way removed from our day-to-day lives. Telephone book number expenditure is often quoted on some very abstract projects (infrastructure? cyber safety? border security?) which are hard to relate to. But the money that is allocated in the annual budget will eventually have a major tangible impact on your quality of life; your health, wellbeing and retirement affordability.

That’s why the team at Retirement Essentials has strong views on the things we think could be done to make a huge difference for older Australians. Yes, budget spending is current account (spending money raised from taxes from those currently working). So there is always some discussion around the ‘fairness’ of using revenue from younger taxpayers to fund more services for older Australians. This can be a false argument, though, as nearly every older Australian has paid more than their fair share of investment, across the decades, in roads, airports, childcare and the environment to ensure a better future for younger generations. 

Our team also isn’t advocating massively expensive projects (no AUKUS here!). Instead we are looking at the ways the current retirement income system could be improved – for very little outlay. Ways to ensure that retirees are able to remain active and productive for much longer. This includes allowing them to work more – which would significantly benefit the nation’s productivity if it came to pass. 

So read on for our thoughts on what Treasurer Jim Chalmers should announce on Tuesday 14 May – and we encourage you to share your thoughts on anything we may have missed. It’s helpful to remember that the Retirement Essentials’ team is in touch with every day retirees, every working day. This means that we are fully exposed to your concerns, needs and annoyances when it comes to managing your retirement income. As always, we’re on your side when it comes to making Australia’s retirement income system work better, sooner.

Most of us are open to doing the maths and setting goals if we believe those goals are achievable. Resistance can set in, however, if we think that the targets are unrealistic. It could be that this has become the case with the commonly accepted quarterly ‘Retirement Standards’.
These Retirement Standards (published by the Association of Super Funds Australia or ASFA) were updated late last month, to reflect price changes through to 31 December 2023.
The Retirement Standard suggests two levels of retirement lifestyle; modest and comfortable.
The table below contains the suggested amounts required per week and per annum for those aged 65-84, for each of these retirement lifestyles.
Advocacy group, Super Consumers Australia (SCA) also shares targets for retiree spending. These targets have three levels, low, medium and high which are listed in the table. We’ve also included the full Age Pension rates (including supplements) and median super rates at Age Pension qualification age and when many Australians retire (ages 65-69).

The reason for including these seemingly conflicting amounts is to set the scene for a discussion about how YOU can work out what is a reasonable spending pattern in retirement and whether your current savings will allow you to maintain this cashflow level.

Do you, too, find the Work Bonus credit as clear as mud? We suspect this may be the case because of the volume of questions we receive on this top. It seems that many Retirement Essentials’ members are simply bamboozled by what should be a straightforward calculation.

The following explainer of the Work Bonus is possible because our Head of Customer Services, Steven Sadler, has taken the time to step us patiently through the rules. Again! Someone send this man some chocolates now!

With the footy season underway, I thought I’d share a favorite story:  I was lucky to spend a few moments alone with Geelong Captain Joel Selwood, at a 2013 Grand Final Day event. He was pretty subdued as Geelong had missed the big game due to a memorable 5 point Preliminary Final loss to the Hawks.  The Cats had been ahead 20 points at three quarter time but faced a resurgent Hawks to lag by six points with seconds to go. Geelong’s Travis Varcoe had the opportunity to tie the score when he kicked from 30 metres in front.  The kick sailed right to record a minor score..and the game was lost.

I said, “great year, Joel.  Hope the team isn’t going to give Travis Varcoe too hard a time.”  Joel simply said: “Well, we’re trained to get those.”

That short reply said a lot.  Still hurting.  High expectations.  Incredible intensity and competitiveness. And even though we’re trained over and over, we professionals still miss.  We make mistakes.

Imagine then that you were playing a really important game, but one you’ve never played before. Maybe watched a match once or twice from the grandstands.  You don’t know the rules —and they’re really complex.  And have never been trained.

That’s what going into retirement is like for most Australians. 

It’s not a game they’ve played before; it’s got complex rules; and they haven’t been trained.  And with the small number of financial planners, and the very high costs of traditional financial planning (typically $3500-$5,000), there’s very little affordable coaching staff available —except to the wealthy.

This week one of our team, Mikahil Walden, pointed out an anomaly in the Age Pension thresholds that really disadvantages one group of people.  And in the midst of a national housing crisis it’s renters that are missing out.

If you’re a 65-year old male reading this article you stand a good chance of living until at least 85.3 years. If you’re a female of the same age, you’re likely to get more than 20 years, with life expectancy of 88 (Australian Institute of Health and Welfare). Half of those reading (who are 65) will last even longer. Hopefully this means 20-plus years of health and fulfilling activities ahead.

Long life is great news, but many people often grapple with this concept of longevity as they worry how they might stretch their funds to cover these decades. As you will be well aware there are many different ways of accessing your super and private savings to support your needs in retirement. But working out the pros and cons of the different ways of withdrawing super can feel challenging. Today we discuss the various aspects of ‘lifetime income streams’ and how they can be used as part of your retirement funding mix.

I love the story Jack Bogle, legendary founder of Vanguard, told to open my favourite of his dozen books:

 “At a party given by a billionaire, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history.  Heller responds, ‘Yes, but I have something he will never have…enough.’”  

I like the way it reminds us that it’s not money that brings the greatest happiness to life.  There’s so much more.  It reminds us that we don’t necessarily need a lot to live on…so long as we really appreciate the things around us.  (Surrounded by my seven grandkids and the rest of my family at Christmas, I thought, what else do I need?)

It’s a great word, “enough,” with so many uses. And it’s core to what we do at Retirement Essentials.  We’re helping with the “enough” problems.  Do I have enough to retire?  Will we have enough to last us? And often, I’ve had enough of Centrelink or the super rules?  Can you help me work it out?  

While money isn’t the secret to happiness, it helps.  And you need enough to live your life.

The current housing crisis can be seen in many ways. The most obvious is the reduced ability for younger Australians to get a foot in the property market. But there are other ways it hurts as well. One is the growing trend for couples who separate to stay together, at least physically, as it is too hard or too expensive to go out on their own to rent or buy.

Obviously it’s far from ideal if you decide you don’t wish to be together any longer and financial circumstances force you to stay in the same dwelling and to report on this situation to a third party, i.e. Centrelink. This situation comes up quite a lot in our consultations with people who are trying to navigate the Centrelink maze.

But it’s also relevant to those who are new to a relationship – at what point does a first date become a ‘relationship’? And we’ve had questions on how Centrelink views same sex marriage, a brother and sister who share, and a mother and daughter who also share. So read on for a summary of the main rules and how we’ve solved some of the Retirement Essentials members’ questions.