A recent question from a concerned child has sparked a massive debate among Australians: what happens when a retired couple’s wealth grows, but they risk losing their pension?
The Pensions System in Australia
To be eligible for the pension, you must be 67 years or older. The maximum fortnightly payment for a single person is $1,144.40, and $1,725.20 for a couple. However, the pension amount reduces by 50 cents for every dollar over $212 a person receives in income per fortnight.
The Concerned Couple
A couple in their 90s receives a part-age pension payment and has a share portfolio worth around $895,000. They’re worried that if their fortune grows, they’ll lose their pension and benefits. According to Noel Whittaker, a Sydney Morning Herald money columnist, the couple can take steps to keep their total usable assets figure below the threshold.
Creative Solutions
Whittaker suggests the couple get their furniture valued at “garage sale prices” rather than replacement prices. They could also reduce assets by prepaying for their funerals, renovating their home, and making a gift of $10,000. If they give a larger sum of money to their children now, their pension wouldn’t be reduced, but it would be held as a deprived asset for five years without increasing in value.
The Debate Begins
When a Sydney local shared the article on social media, it sparked a heated debate. “Why are 90-year-old millionaires worried about losing a welfare payment?” Some people branded the couple “greedy,” claiming they had more than enough to live on for the rest of their retirement. Others suspected it was the child who was concerned, rather than the parents.
It’s Not Just About the Money
Many people pointed out that the couple’s concerns may not be solely related to the payments they’re receiving. Their pension payments might not be very high, and their main concern could be losing medical benefits that pensioners get. Others saw the age pension as a “long-term saving scheme for retirement.”
The Reality of Retirement
According to the ATO, the average super fund balance for women aged 65-69 was $403,038, and $453,075 for men. The Association of Superannuation Funds of Australia (ASFA) recommends a superannuation balance of $595,000 for a single person, or $690,000 for a couple, to achieve a comfortable retirement standard. Research from Finder found that many Australians won’t be able to financially support themselves when they stop working.
Taking Control of Your Retirement
So, what can you do to ensure a comfortable retirement? Taylor Blackburn, a personal finance specialist at Finder, suggests consolidating your super funds to reduce fees and boost your savings. You can also consider salary sacrificing into your super fund, starting small and taking advantage of compounding interest.
What do you think? Should 90-year-old millionaires worry about losing their pension? Share your thoughts in the comments!