Robert's Retirement Blog

I hear this statement often “I need to wait until I am 67 to retire”. Depending on one’s individual circumstances, this might not be the case and is dependant on what you are trying to achieve. I hear this a lot due to 67 being the age where if someone is eligible for the Centrelink Age Pension -they can claim it.

No Social Security

First, not everyone is going to be eligible for the Age Pension due to assets or income being above the limits. So, working until age 67 because you have heard it through “the grape vine” is not usually necessary.

However, it is always a question of in retirement what income do you need (your living expenses)? Then working backwards from there on how you will get that income.

Provided you are over the age of 60, you can access any accumulated superannuation to help start “living off of it” if you retire. With this income from your superannuation, you may be able to support your living expenses, or you may have other assets outside of your superannuation like an investment property with rental income you can use.

If you are retiring prior to age 60, it is important you have sufficient assets outside of superannuation to sustain your living expenses, knowing that at 60 you can then access your …

A common misconception with TTR Pensions is the fact that consumers think to commence one you need to reduce your working hours. This is not the case and even if you are still working aged over 60 and prior to age 65 (and haven’t met any other condition of release to access a normal account-based pension) – you can commence one, regardless of your working hours.

What is a TTR Pension?

A TTR Pension is simply moving your superannuation held in accumulation into a type of income stream where you can start accessing it. The criteria is essentially being aged 60 (preservation age). It is irrespective of if you are trying to “transition to retirement” or not.

Your money also can still be invested, with the same or a different approach as to what your superannuation account was invested like. Unfortunately, there are no “extra” tax concessions with a TTR Pension. Earnings within the fund are still taxed at up to 15% like superannuation. However, when you meet a further condition of release of superannuation (such as reaching age 65). Then the TTR Pension can be converted to a normal account-based pension (ABP) where earnings are not taxed at all! Note – prior to 1st of July 2017, TTR Pension’s did used to carry the same tax concessions …

Most superannuation funds give you choice of who you can nominate as a beneficiary to receive your super benefits in the event you pass away. I say most as here in South Australia for example, the state government super scheme (SuperSA Triple S) has a different set of rules where it automatically gets paid to a surviving spouse or you can choose to nominate your Legal Personal Representative (i.e. your Estate).

Whether who you nominate is a valid nomination or isn’t a valid nomination is often discussed. Generally only a dependant can be nominated, and if you don’t want it to go to a dependant, then you can nominate your Estate (for it to be administered as per your instructions in the Will for example).

Who is a dependant? Dependant’s can be:

• Your spouse or de facto spouse
• Your children (including step and adopted children of your spouse)
• a person who lives with you in a close personal relationship and depends on you financially. They may provide you with:
  • domestic support and
  • personal care

I have come across people nominating for example their sibling as a death benefit nomination on their superannuation fund. Now in reality although it might say it on your statement that your sibling is the beneficiary as this is who …

Super accessibility is a topic that gets brought up often and some of the rules have changed around this. In this blog post I am only going to focus on some age based and retirement conditions of release. Noting there are other potential ways of accessing your super such as illness and compassionate grounds with their own sets of rules.

Being age 65

At the moment with the current rules set by the ATO – the current age regardless of if you are working or not is 65 where you can access your superannuation in full. This includes being able to withdraw it in full or at this point you also have access to an “account based pension/income stream”. A big benefit of these income streams are that all earnings from the fund in an account based pension are tax exempt. It is important to seek advice in this area as there are some potential detriments to these pensions for example if you are planning to receive JobSeeker from age 65 to your Age Pension age at 67, Centrelink will assess the value of your income stream (or if you withdraw your super – they will assess this also).

Retirement at preservation age

Another way of being able to access your superannuation is ceasing a gainful employment arrangement, retiring and never intend to be …

For those on Centrelink entitlements or looking to move onto Centrelink entitlements such as the Age Pension, Disability Support Pension or JobSeeker – you may have heard of the terminology called “deeming rates”.

What is it? – Well a deeming rate is what Centrelink use to determine the level of income you earn from your financial assets – regardless of what they actually earn. This level of income will then be used to calculate and potentially reduce your entitlement as part of the income test Centrelink use to calculate what you are entitled to. (Note there is an asset test also for the above mentioned Centrelink payments – for the purpose of this article I am just focusing on the income test).

So say for example you are single, age 67, own your own home and your only asset is $280,000 in the bank earning 5% interest. The interest on this is $14,000 p.a. – Centrelink won’t actually look at this interest, they will essentially use their “deeming rates” to calculate what they assumed you to earn. Currently the rates are 0.25% assumed to be earnt on any financial asset up to $60,400 for singles and $100,200 for couples. Then for financial assets over this amount the excess is assumed to be earnt at a rate of 2.25%.

Using these …

I hear this statement quite a lot. Although in some situations it is true. I find more often than not – there is always some potential benefits clients can obtain from Centrelink, even those who think they have too many assets or income.

The entitlement I am referring to is the Commonwealth Seniors Health Care Card.

This - as quoted from the Services Australia website gives access the card holder access to:

• Cheaper medicine under the Pharmaceutical Benefits Scheme
• Bulk billed doctor visits - this is up to your doctor
• A refund for medical costs when you reach the Medicare Safety Net.

This card is generally available to those who are of age pension age and can’t get an age pension due to their asset level or income level. There are other criteria also however I am going to focus on the asset/income part.

This entitlement is means tested, however it only looks at the income part of your situation, it ignores all your assets.

I have an example below of someone who is age pension age, significant level of assets but still eligible for the Commonwealth Seniors Health Care Card.

Client: Bob

Date of Birth: 28/04/1957 (67)

Assets:

• Principal Residence = $1,000,000
• Car = $20,000
• Contents = $10,000
• Deemed account based pension: $2,000,000 …

What everyone needs and wants financially differs from person to person.

This blog is really just highlighting what the payment rates are for the full Australian Age Pension who are members of a couple or single versus what an association called the Association of Superannuation Funds of Australia (ASFA) thinks is needed as a total yearly living expenditure figure for a comfortable or a modest lifestyle for those aged 65-84 who are retired and own their own home.

Couples

Currently as at the time of writing 1st of April 2024, the full age pension for a couple is $841.40 per fortnight each which is $43,752.80 per annum combined if both members of the couple are eligible.

Latest research from the December quarter 2023 from the ASFA say that a couple who are wanting a comfortable lifestyle will need $72,148.19 per annum to spend on the cost of living whereas a couple who live a modest lifestyle may only need $46,994.28 per annum.

Singles

The full age pension for a single person is $1,116.30 per fortnight which is $29,023.80 per annum.

Latest research from the December quarter 2023 from the ASFA say that a single person who is wanting a comfortable lifestyle will need $51,278.30 per annum to spend on the cost of living whereas a modest …

There are many different employment arrangements nurses may have with many different companies in different sectors. 

This blog post is just to highlight a few advantages that you may get with different “salary packing/sacrifice” options.

When comparing salaries offered through different sectors, it is also important to compare the various benefits in each sector.

Salary Sacrifice to superannuation

One first big consideration for an SA government employed nurse is the fact they have access to the SuperSA Triple S Scheme. This enables you to contribute concessionally to superannuation via salary sacrifice up to $1.705 million over your lifetime (as at 2023/2024 financial year and also includes employer contributions). Where as any other employer outside of this you are limited to only $27,500 per year (as at 2023/2024 financial year and also includes employer contributions). This may not be so important for a younger nurse who has a large mortgage with not much capacity to contribute but may be more beneficial to those with extra surplus cash flow or the ability to commence Transition to Retirement strategies (TTR). Salary sacrifice to superannuation, depending on your wage can considerably reduce the tax you pay meaning your …

There are a number of factors to consider if you are currently on the disability support pension and are coming to the point of turning age pension age (67) and have to decide whether you would like to retain your disability pension or move to the age pension. I have tried to summarise a few points below – this list is not exhaustive and please seek personalised advice specific to your situation before making any decisions. 

Does one pension pay more than the other?

Firstly, to determine your level of age pension or disability pension – Centrelink will run a “means test” which looks at the amount of assets you have and the amount of income to determine your eligibility for a payment and how much of a payment you receive. This test remains the same on disability support pension or on an aged pension. The amount Centrelink will pay for the disability and the age pension also remains the same. Please note prior to your age pension age of 67, your superannuation may not have been assessed as an asset if it was still in accumulation phase – it will now be assessed on each entitlement once you turn 67.

What are the potential tax implications?

The disability support pension prior to age pension age is tax exempt, once you reach age …

Superannuation guarantee (SG) contributions is the terminology applied to the amounts of super your employer contributes. At the time of this writing we are almost half way through the legislated increases with the SG amount now being 11% of your wage. 

There are a few more increases on the way in future years as per the below table.

The Association of Superannuation Funds of Australia considers 12 per cent SG to be critical to helping individual retirees to achieve a dignified retirement as well as improve the sustainability of the Age Pension and take pressure off future federal Government budgets as the population ages.

Periods:

• 1 July 2019 – 30 June 2020: 9.5% Super guarantee
• 1 July 2020 – 30 June 2021: 9.5% Super guarantee
• 1 July 2021 – 30 June 2022: 10% Super guarantee
• 1 July 2022 – 30 June 2023: 10.5% Super guarantee
• 1 July 2023 – 30 June 2024: 11% Super guarantee
• 1 July 2024 – 30 June 2025: 11.5% Super guarantee
• 1 July 2025 – 30 June 2026: 12% Super guarantee
• 1 July 2026 – 30 June 2027: 12% Super guarantee
• 1 July 2027 – 30 June 2028 and onwards: 12% Super guarantee