Will spending boost your Age Pension?

What if spending some of your savings could actually increase your income in retirement? For people with assets just above the Age Pension cut-off, that’s not just wishful thinking—it’s a real and measurable opportunity.

From 20 March 2025, the updated Age Pension asset thresholds mean that even a small reduction in assessable assets could make you eligible for a valuable part-Age Pension. The amount that you receive may start small but can grow over time and deliver substantial financial benefits across retirement.

When the pension stops

The Age Pension is subject to an asset test that reduces your payment by $3 per fortnight for every $1,000 you have above the lower threshold. Once you reach the upper limit, the payment stops entirely.

For couples who own their home, that upper limit is $1,047,500. If your combined assets exceed that—even by just one dollar—you won’t receive any Age Pension at all.

Here are the key thresholds for part-Age Pension eligibility from 20 March 2025:

Your situation	Homeowner	Non-homeowner
Single	$697,000	$949,000
Couple combined	$1,047,500	$1,299,500
Couple, separated due to illness	$1,236,000	$1,488,000

These thresholds apply to both your financial and personal assets. For couples, it’s the total amount that counts.

Why spending helps

If your assets sit just above the relevant threshold, you may be in the unusual position of having “too much” to qualify for the Age Pension—but not so much that you wouldn’t benefit from a small regular income and the valuable Pension Concession Card (PCC).

Rather than holding onto those savings indefinitely, spending a portion on planned, purposeful expenses—especially in the early years of retirement—can help reduce your assessable assets and move you back into Age Pension-eligible territory.

How it worked for Paul and Linda

Paul and Linda are 70 and 71, newly retired, and own their home. They had a combined $1,060,000 in financial assets – just above the Age Pension cut-off for couples who are homeowners. That meant no Age Pension and no PCC, although they still qualified for the Commonwealth Seniors Health Card (CSHC).

They sat down to revisit their retirement plans. There were a few things on their wish list: a furniture and kitchen appliance upgrade, some overdue home maintenance, and a desire to gift modest amounts to family over time. After crunching the numbers, they decided to go ahead.

In May 2025, they plan to spend $50,000 on home upgrades, followed by $10,000 on maintenance in July. They’ve also pencilled in $7,000 for travel in 2027 and plan to gift $10,000 a year (still within Centrelink’s allowable limits) from 2028 to 2031.. Altogether, they’ll spend around $97,000 over six years— on things they truly value.

That early spending reduced their assessable assets below the threshold. In the first year alone, further spending meant their Age Pension entitlement is estimated to have increased from around $2,000 to $5,000. Over the next decade, they’re likely to receive more than $60,000 in additional Age Pension payments—and now hold a PCC that offers real savings on medical and utility bills.

The long-term picture

A natural question arises: doesn’t spending now reduce your long-term security?

Paul and Linda’s retirement spending target is $75,000 per year—around the ASFA benchmark for a comfortable lifestyle. Projections show that if they didn’t go ahead with the spending, they could expect to have around $342,000 left in super and other savings at age 95. With the spending, that balance is more likely to be around $276,000—a difference of around $66,000 over 25 years.

For Paul and Linda, that was a trade-off they were happy to make. The travel, home improvements, and support for family added value to their life today—while still keeping them in a strong financial position in their later years.

What counts, what doesn’t?

Centrelink doesn’t count every purchase the same way, so it’s worth knowing what types of spending can reduce assessable assets.

Examples of common forms of spending include:

Home repairs, maintenance, or improvements
Replacing furniture, whitegoods or vehicles
Lifestyle travel in early retirement
Gifting within allowable limits ($10,000 per year, $30,000 over five years)
Prepaid medical or funeral costs

Where you do spend a significant amount, it’s in your favour to update Centrelink with the changes. Find out more about in the Good guide to updating Centrelink.

Using money with purpose

Paul and Linda’s story shows that you don’t need to hoard your savings to be financially secure in retirement. Strategic spending—on things that genuinely improve your life—can open the door to thousands in extra income and other benefits.

If your financial assets are close to the cut-off, even a modest change could make all the difference.

What you can do next

Start by checking your Age Pension entitlement using the Retirement Essentials Age Pension Eligibility Calculator It’s free, quick and can show whether you’re close to qualifying.

If you’re considering a major expense and unsure how your plans might affect your Age Pension entitlements or retirement strategy, a Retirement Advice Consultation could assist to understand the trade-offs and decide what’s right for you.

Let’s talk about it

Have you ever hesitated to spend because you were worried about missing out on the pension?

Do you find it difficult to fund your lifestyle goals on limited savings?