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With many changes coming into effect this year – and more reforms being suggested – now is a great time to get your finances organised so you’re prepared.
Changes to the Age Pension
Changes to the Age Pension assets test kicked in at the beginning of this month.
The good news is that the threshold has been increased, so you can now own more assets before your pension is affected. But the penalty for going over the threshold has also increased. For every $1,000 of assets you have above the new threshold, your pension will be reduced by $3 – double what it used to be.
The asset test threshold varies depending on your marital status and whether you own a home, so it’s best to talk to your adviser about the changes.
The age of entitlement
A Grattan Institute report titled Age of entitlement: age-based tax breaks published in November last year suggested that making several changes to the entitlements seniors receive could save the federal government $1 billion a year.
The institute recommended winding back:
- the seniors and pensioners tax offset (SAPTO)
- the Medicare levy income threshold for seniors
- the private health insurance rebate for seniors, so they receive the same rebate as younger Australians.
The recommendations focus on retirees who have incomes at taxable levels. These may be retirees who are self‑funded or on a part Age Pension. The changes would have little effect on seniors who receive a full Age Pension. While these are only recommendations at this stage, you may benefit most from preparing early.
Stay informed and plan ahead
Staying up to date about any changes to superannuation and seniors’ entitlements – locked in or potential – may help put you one step ahead. Regularly reviewing your retirement plan to ensure it can adapt to changes is an excellent way to keep your retirement strategy resilient. Talking to a trusted financial adviser may help you achieve that peace of mind.