Kaye Fallick

Kaye is a retirement commentator and coach, with 25 years’ experience writing about retirement income. She has authored two books on life stage changes – Get a New Life and What Next? – and enjoys regular radio and podcast appearances. Her favourite mission is to offer plain English explanations of complex rules so that all retirees can benefit. She is based in Melbourne but enjoys escaping to Italy whenever possible.
Using Age Pension changes to your advantage

Using Age Pension changes to your advantage

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The Age Pension payment changes on 20 September could mean so much more than a few extra dollars. Here’s how to use this trigger to maximise your income sooner rather than later.

As we advised late last month, 20 September will deliver a fortnightly $29.70 increase to singles on. A full Age Pension and $44.80 combined to couples. (If you’re on a part-Age Pension, this extra amount will be paid on a pro-rata basis). 

These increases may not at first glance seem to amount to much, but there are ways of using this update that can help ensure you make the most of every last cent. And it’s worth remembering, the increase in the base rate of the Age Pension is not the only change. There are quite a few other adjustments that offer a really useful trigger to review your current situation and/or entitlements.

Here are the three most important reviews you can undertake to ensure you are on top of your income.

Is $500k enough to retire on? Or will you need more?

Is $500k enough to retire on? Or will you need more?

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One of the great myths about retirement over the last 20 or so years is the significant sums of money you are going to need. For far too long the myth of a million dollars was prevalent. This went largely unchallenged when most Australians were saving for retirement, but not yet there. But as baby boomers began to approach retirement needing to actually live off these savings, attention began to shift to the spending (or decumulation) phase. And a quick glance at the numbers tells us that very few Australians will have $1 million in savings when they leave full-time work. Nor will they have the revised ASFA targets of $660,000 for couples and $590,000 for singles. Far from it.

The most recent ATO data release reveals the median super balances for those aged 65-69 are as follows:

Single male $218,000

Single female $199,000

(assume) couple $417,000So it is clear that the median couple is currently retiring on less than $500,000. This means that the correct question is not, is $500,000 enough for an enjoyable retirement?, but rather, how are the majority of Australians who have about this amount in joint savings making the most of their money?

Is now the time to increase your income?

Is now the time to increase your income?

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Now is the time of year you will receive your annual super statement. There are three ways you might respond:

Ignore it.

Use the opportunity to conduct a regular checkup to see how you are going … or

Go further and use this as a trigger to finetune your investments and increase your income

Which action will you take?

Because superannuation contributions have been mandatory since 1992, most Australians now have enough money in super to care how it is being managed and how quickly it is growing. Mandatory super also means mandatory reporting, hence the requirement for all super funds to advise members on the performance of money in their account during the previous financial year.

Different funds will send statements which vary in the amount of detail shared and how the statements are set out. Don’t let statements which are pages long put you off. Now is your chance to get into the driver’s seat and take control of your money and its implications for a comfortable retirement. There are five main pulse points you will need to understand:

Opening and closing balances

Movement of your balance year-on-year

Account summary with transactions and earnings

How and where your money is invested

Insurance provisions and beneficiaries

Each of these pulse points can deliver a different message, with the sum of these messages enabling you to project income changes and consider ways to increase the longevity of your savings. Here’s a brief summary of what to look for and how to use the information you glean.