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A boomer has complained she doesn’t want her pension reduced even though she has almost half-a-million dollars in assets and owns her own house.
The 75-year-old woman told The West Australian she feared her fortnightly age pension payments would be slashed because she was set to inherit $300,000.
She explained she had $160,000 in a superannuation account-based pension fund.
‘As my age prevents me from topping up my super, could you advise me on what options I have to optimise my cash flow inclusive of my aged pension and if there is any grace period to decide how to restructure my finances?’ she asked.
Columnist and financial planner Nick Bruining calculated the woman would also have car and contents, adding $30,000 to her assets.
He said the $300,000 inheritance would bring it up to $490,000.
‘This puts you about $176,000 over the single homeowner asset test threshold of $314,000 and you will likely lose about $528 a fortnight from the full rate of $1116.30,’ he wrote.
Mr Bruining suggested the woman can use the money to make investments such as renovating her home to exploit a loophole where the family home is exempt from the assets test.
A boomer has complained she doesn’t want her pension reduced even though she has almost half-a-million dollars in assets and owns her own house (stock image)
‘By spending money on your home this way, you are effectively shifting money from an assessed asset (a bank account) to an exempt asset (your home),’ he wrote.
Mr Bruining said the woman could also spend the money on a lavish holiday or fund the cost of her funeral.
‘You can also invest money into a special funeral bond fund where the money is only released upon your death,’ he wrote.
‘Up to $15,500 invested this way is exempt from Centrelink means testing’.
A single age pensioner is now eligible to receive $1,116.30 per fortnight if they make less than $212 within the same time period.
An income of more than $212 a fortnight automatically reduces the pension by 50 cents for each dollar over this figure.
‘You might also consider upgrading your car. While the value of the new car is still an assessable asset, the value depreciates immediately,’ Mr Bruining said.
‘You can use the private sale value of the car for Centrelink purposes which may be as much as 20 per cent less than the amount you pay for it.’
A single pensioner is currently eligible to receive $1,116.30 per fortnight (stock image)
Super Consumers Australia data calculates $279,000 is enough for a modest retirement for a single person – as long as they own their own home and limit their yearly spending to $41,000.
The figure is slightly higher for couples, with $371,000 needed if $60,000 is expected to be spent each year.
Someone’s family home, also known as their principal place of residence, is exempt from the assets test if they live in it or have been away from the house or apartment for less than two years.
But once they sell, the money from the sale is considered as part of the assets test.
Investment properties, including those that are rented out, are also included in the government’s assets test.
