Age pension boost: how to maximise your retirement money

Age pension payments are unlikely to rise sharply this year, but Anthony Keane explains how retirees can get extra cash.

Living on $472 a week – the maximum rate of a single age pension – is no picnic in today’s world of high energy costs, high tech and high expectations of consumers.

But that’s the sole source of money for more than half of Aussie retirees, according to Australian Bureau of Statistics data.

It’s easy to forget that compulsory superannuation only started in the 1990s, and it was at much lower rates than today’s 9.5 per cent of wages, leaving millions of retirees without a decent-sized super nest egg to add to their pension income.

While the age pension isn’t huge – and looks unlikely to rise sharply this year while the government instead focuses on lifting unemployment benefits – there’s plenty of other assistance available for retirees.

Seniors should keep on top of their assets and the age pension rules. Picture: iStock

And there are strategies to turn a part pension into a full pension. Many retirees miss out on all their entitlements by failing to update assets and other information regularly with Centrelink.

Here’s how to maximise pension income.

ASSET CHECK

Overvaluing your assets, car and home contents can reduce the maximum pension, and Centrelink only requires second-hand valuations. Some retirement specialist say $10,000 is fair value for a couple’s home contents’

Many seniors saw their assets drop sharply when the pandemic struck, but might not have updated Centrelink.

GIFTING

You can lower your assessable assets by giving money away, but it’s limited to $10,000 in a financial year and $30,000 in a five-year period.

Being generous can deliver more than $700 a year in extra age pension, but be mindful that it also lowers your assets.

CHECK PAYMENTS

Centrelink has dozens of payments and assistance options for pensioners and allowance recipients.

Its online Payment and Service Finder is a great starting point and asks a few general questions about your situation.

Big benefits are available through the Commonwealth Seniors Health Card and other state-based seniors’ cards.

EARN EXTRA CASH

Got a hobby that might generate some spare money? You’re allowed to earn $300 a fortnight and still claim a full pension thanks to the Work Bonus Scheme.

This scheme lets people earn up to $7800 a year from wages, self-employment or paid leave, but doesn’t apply to income from investments or superannuation. There’s no paperwork because Centrelink applies it automatically.

PENSION LOAN SCHEME

Many retiree homeowners are asset rich but income poor.

The Federal Government’s Pension Loans Scheme lets them dip into the equity in their family home to deliver an income boost of up to 50 per cent of the maximum age pension rate

Like any reverse mortgage, there’s interest payable and the government currently sets this at 4.5 per cent. It compounds fortnightly, adding to the size of the loan, so get some advice before following this path.

DEATH DEDUCTIONS

Nobody likes thinking about their own demise, but if you prepay your funeral or buy a funeral bond it can reduce your Centrelink assessable assets.

The limit for funeral bonds is $13,500 for reducing assessable assets, and there’s no limit for prepaid funerals.

@keanemoney