Top five wins for retirees …
…in 2022 and beyond
What were the changes/issues that most affected retirees income in 2022?
It’s easy to feel rattled such frequent headlines of interest rate rises and galloping inflation – particularly when you are trying to manage on a fixed income. So things can sometimes feel as though they are heading south, permanently. But that’s not necessarily the case. Today we have identified what we consider to be the five biggest wins for retirees in 2022. It’s heartening news also for anyone approaching retirement and concerned that their money won’t last.
Here’s our list of the top five wins last year and how each one might improve your life in retirement
Expanded Work Bonus
The $4000 Work Bonus increase was confirmed in the October 2022 Federal Budget. The original end date of 30 June has now been extended to 31 December 2023. So essentially, you now have this entire calendar year to earn an extra $4000 before losing any entitlements should you be on an Age Pension.
Highest inflation-adjusted increases to Age Pension
Inflation took off last year, but as the Age Pension is indexed in line with both the Consumer Price Index (CPI) and the Pension Beneficiary Living Cost Index (PBLCI), and then linked to the average male wage, the increases to the Age Pension in 2022 were substantially higher than we have seen for many years. March increases added $20.10 to singles and $15.10 to couples, whilst 20 September increases were $38.90 and $29.40 respectively. The highest CPI since 1990 was experienced in the December 2022 quarter, so expect the increase in March to be in the order of 3.8% or more.
Wins for self-funded retirees
Alongside threshold increases to the assets test for the Age Pension there was a big win for self-funded retirees. This came in the form of a huge lift in the income threshold for the Commonwealth Seniors Health Card. The singles threshold increased from $57,761 to $90,000, while couples threshold went up to $144,000 from $92,416.
We were delighted to hear from a member who had noted the increased thresholds, applied and having now received his concession card, is pleased with the savings already.
Freezing of Deeming Rates
When on a fixed income, every little bit counts, and nowhere more so that the way your income might be deemed by Centrelink. This calculation has a direct flow-on effect on your fortnightly payments. The good news for Age Pensioners from last year is that deeming rates are now frozen until 30 June 2024. This freeze has been introduced during a time of rapidly rising interest rates, when many retirees are finally starting to get a 3-5% return on their cash or term deposits. Now that the deeming rates are frozen at 2.25% for balances of $56,400 for singles, or $93,600 for couples, and 0.25% for lower balances, there is finally a chance to claw back some of the money forgone over recent years, when most savings interest rates were actually lower than the amount Centrelink deemed them to earn.
Whilst technically 2023 changes (they came into effect on 1 January), there is a significant upside for retirees looking to sell their main residence from now onwards. We have reported on these changes extensively over the holiday break. There are two main innovations – one in the way Centrelink treats funds gained from the sale of your family home, and the second, the way such funds can be contributed to superannuation, particularly in relation to the ‘bring forward’ rule. These changes can improve your bottom line by thousands of dollars.
What say you?
Do you agree that these are the five changes that have made life measurably better for those in retirement?
Or do you think we’ve got it wrong?
Need help to better understand these rule changes and apply them to your options? You can book an entitlements consultation here.