This is nobody’s business but your own, you may think. But when it comes to retirement there is a big dividend to be gained from knowing and responding to the rules. First up, it helps to know that you are entitled to apply for an Age Pension when you reach the correct age, related to your date of birth (see below for extra detail on the importance of applying early). It does not matter that your spouse is below Age Pension age – your joint assets and income, however, will be assessed. And if you are successful, you will be paid half the couple’s age pension. Your spouse can then apply when he/she reaches Age Pension age, and the other ‘half’ of the couples’ pension will be paid.
The critical point, however, is the treatment of a younger spouse’s super. If your spouse is below age pension age and their super is still in the accumulation phase, then their super is not included in the assessment of assets for your Age Pension eligibility. This can make a huge difference to your assessment, so it is important to both understand this rule and ensure you comply with it if one of you seeks a pension earlier than the other.
The other rule that has a major impact upon your eligibility is the ‘bring forward rule’ which allows you to contribute up to $330,000 to your, or your partner’s, super, assuming they meet the relevant rules. There’s a lot to understand here, so speaking with a supportive financial adviser is key to good decision-making.
Evie and Dave
Evie is 57 and Dave is 67. Evie wants to keep working. Dave decides to apply for the Age Pension. With $1,100,000 in assets, and combined income of $56,000, he does not qualify due to the assets test. Dave makes a lump sum contribution of $220,000 to Evie’s accumulation account. He could have contributed as much as $330,000 under the bring forward provision but $220,000 was enough to qualify for a part Age Pension as their joint assessable assets (which excludes Evie’s super) have moved to below the threshold for home owners. In addition to a small Age Pension Dave also receives some age pension supplements and the Pensioner Concession Card.
You can also book a “younger spouse” consultation here.
The first step to maximising your entitlements is to check you are getting all of yours. You can get started by using our free calculator.
This article is provided by Retirement Essentials Representative Number: 001260855. We are an authorised representative of SuperEd Pty Ltd ABN 88 118 480 907 AFSL #468859. This information is not intended as financial product advice, legal advice or taxation advice. It does not take into account your personal situation, goals or needs and you should assess your own financial situation, consider if the information is suitable for you and ensure you read the relevant Product Disclosure Statement (PDS) if you choose to make any changes to your financial situation. It is always advisable to consult a financial adviser before making financial decisions.