So why are older Australians penalised for earning more?
Current economic data confirms that Australia now has too few workers for jobs that urgently need to be done. With unemployment hovering around 4% and predicted to tighten further there are now jobs available for the majority of people who want them.
And this includes retirees, many of whom never really wanted to cease work entirely.
And others who need a cash top-up to cover household expenses, medical bills and home maintenance.
And, of course, those who are renting in retirement, spending about a third of their income on accommodation, in a rental market with rapidly increasing prices.
A stated aim of governments of all persuasions is to encourage more older Australians to remain in, or head back to, the workplace. The economic benefits are profound.
But whilst there is a need for workers, about 2.5 million older Australians are prevented from seeking work as they will be financially penalised for doing so.
This number refers to the nearly 70% of all retirees who are on a full or part Age Pension.
Research released this week by the National Seniors Association (NSA) shows that at least 20% of this cohort – half a million people – would happily head back to work.
But for those who are on a full Age Pension the price is too high.
If a single Age Pensioner earns more than $480 a fortnight, they are immediately penalised, moving to a part Age Pension and losing 50 cents of pension for every dollar they earn above this amount.
Should they earn more than $56,035 a year (couples $85,737.60), they lose their pension entitlement completely, along with the very valuable Pensioner Concession Card, estimated to be worth about $3000 per annum.
As we noted in our Budget 2022 coverage, this system makes little sense.
Retirement Essentials believes that removing income limits from the Age Pension is the most sensible policy for our entire community. The disincentives for some older Australians to work hurt us all. The social connectedness of work, not to mention the additional income, can make a huge difference to the mental and physical health of older people, whilst society as a whole benefits from their skills and experience.
What is your situation?
Do you believe the current income thresholds are appropriate?
Or would you like the opportunity to earn more?
Is there a downside to this suggestion?
How does the income threshold affect your situation right now? Unsure if you head back to work how your entitlement might be affected? Why not check the Age Pension Entitlement Calculator now?
Our free calculator has all the latest rates and thresholds and will help you work out what you could be entitled to receive.
Seniors who have been working their entire life and who choose to remain in the workforce should be provided with an incentive instead of being penalised. A suggestion would be that any income they earned could be tax free or at least a greatly reduced tax as a reward for their contribution to the Australian economy.
Given older people are not welcome in the workforce anyway due to ageism, shouldn’t the real battlefield be raising Centrelink pensions to 80% of a person’s last wage, thereby ensuring a comfortable, dignified and well earned retirement.
Earning from a job whilst getting the Age Pension is a bit of a joke. Sure, there is the Work Bonus but for places like Woolworths, you must work a minimum of 10 hours a week. Which at minimum is $226, being more than the $150 Services Australia allows. And being a ‘second’ source of income (because the Age Pension is taxable too), the tax taken out is higher, no tax exemption for the job. The double whammy – for every dollar over the $150 each week, I also lose pension dollars. So why work? At the moment, because I can, because hubby can’t retire just yet and has medical needs, and I enjoy the social interaction aspect of it. But when hubby and I are both retired, then we’ll need to reconsider if I should work, considering the loss of pension AND the higher taxes paid. I’m not interested in working just to replace what I’m losing because I work.
Great news that older workers are to be welcomed back. Someone should tell the employers!
I’d like a full-time job as an EA to C-suite. That’s what I do. Do you think I can get one? Nope. They want someone not older than 40.
The cap on earnings for pensioners should be raised considering politicians are on a way bigger pension and earnings are unlimited.This is not a level playing field.
I am currently on a Part age pension if I decide to work can I still earn up to $480/ fortnight without affecting my part age pension i.e not lose my part age pension.
Hi Geoff. Under the work bonus you can earn up to $300 a fortnight, $7,800 a year, in employment income without affecting your entitlements. You can read more about the work bonus here This is on top of the minimum income threshold of $180 a fortnight for a single person. So essentially someone could have total income of up to $480 a fortnight, if $300 is employment income, and still receive a full Age Pension if they were also below the minimum assets threshold.
While the financial aspects of working are important the mental health and health benefits are mentioned less, as are the social aspects.