News and Articles

Few people understand retirement income as well as Noel Whitaker. Today we are examining the pros and cons of Lifetime Income Streams (LIS) and Noel has helped us out with some Q&A on these relatively new products. But first, some background. There has been a rapid increase in the number of super funds and financial institutions who offer Lifetime Income Streams. Unsurprisingly, there is also an increase in the uptake of this form of retirement income. Treasury estimates suggest that just 3.5% of super is held in this form of investment. This may not sound high, but individual companies are reporting much higher interest than a few years ago. One of the reasons is that there are more people retiring and converting their super savings into different income streams, so there are a higher number of potential customers. But there has also been a lot of refinement in these offerings – they are much more flexible than those previously offered, so they have gained in appeal as part of a retirement income mix.

A couple of weeks ago we reported on the September 20 Age Pension increases.  This is one of two increases that occur each year with the next one scheduled for March 20 2025.  

We always receive tons of comments on the amount of the increase with the majority claiming it doesn’t meet the increased cost of living.  It doesn’t keep up with rent increases, or insurance costs, or interest rates for those with a mortgage etc are among the comments we typically hear.  So this week we decided to write an overview of how the increase is actually calculated.

We all get to the point when our wages  stop as our years of working come to an end.  Maybe it’s ahead of you; maybe you’ve already gone through it. 

It’s got to be one of the most significant and emotional moments that come with retirement. For years, your life has revolved around a steady income, a regular paypacket that arrives like clockwork, providing not just financial stability, but also a sense of security and identity. The moment that flow of income stops, a wave of uncertainty can wash over you, making it one of life’s most daunting milestones. Will I be Ok? is a question we often hear.

The twice-yearly Age Pension indexation is due to increase 20 September. This Age Pension increase is much higher than the one that was awarded in March this year ($19.60 for singles and $29.40 for couples).

What does retirement risk look like to you? 

For Rob, it means running out of his super savings well before his 80s.

For Ian, it means having unexpected expenses and being unable to meet them.

For Linda it means watching her hard-won savings being eroded by the rising cost-of-living.

Many people want to supplement their income with a bit of paid work after retiring from full time work.  So, we can think about working – after full time work– as the (optional) fifth pillar of retirement. 

Using home equity as a retirement income seems to be the last well kept secret. But that, too, is changing as more industry commentators scrutinise the home wealth access products on the market and conclude that they do have their place in retirement funding.

In the case of planning extended travel, understanding how this might affect your Centrelink situation is really important, even more so if you wish to travel overseas for more than six weeks. 

Robodebt, or to give it its full name, The Income Compliance Program, ended nearly 5 years ago in November 2019. The scheme was designed to recover money owed to Centrelink by people who had received more in payments than they were entitled to receive.  This sounds reasonable in theory unfortunately, however,  it used a computer algorithm and income averaging to calculate individual debts. It also implemented a system known as reverse onus which meant that it was up to the individual to prove they didn’t have a debt rather than the Government having to prove you did have one.  Thousands of people were wrongly accused of being overpaid and this caused severe distress to those people and their families as well as to Centrelink staff tasked with enforcing the system.

One of the key reasons for over payments was the relationship status of claimants. Services Australia had used password ‘crackers’ and metadata to check Centrelink users’ relationship status. It seems this was in order to determine if welfare recipients who claimed to be single were actually in a couple relationship.

A few years ago there was a terrific public safety advertising campaign developed by Metro Trains in Victoria called Dumb ways to die. It was designed to promote railway safety and became the world’s most shared public awareness campaign. It also spawned a video game of the same name.   I was reminded of that campaign when writing this article and at the risk of offending some of our readers I was tempted to call this article Dumb reasons to delay.

My alternative title is apt in many ways as so many people delay applying for the Age Pension for reasons that are just plain wrong and ultimately very costly. It could be because they are misinformed, they believe an urban myth or just don’t understand the rules.  Today I’m listing the five worst (dumbest) reasons  and sincerely hope you have never made, or will make, any of these mistakes.  But believe me when I say, many people do.