There are two groups of people I come across in my work. Those who have significant assets and don’t think they’re entitled to receive anything from Centrelink, and those who understand their entitlements and believe that they deserve to receive benefits because they’ve worked and contributed for so long.
The difference between these two groups is the advice they receive from me. Regardless of your situation, it’s important that you get the right advice around structuring and managing your assets to put you in a better position in retirement.
Most people are eligible to receive something from Centrelink but many self-assess and think that their assets rule them out of any entitlements from the government. It really depends on the type of assets you hold.
For retirees – aged 67 and over, depending on when you were born – the age pension is the main benefit. If you are entitled to an age pension, then you are entitled to many other things, such as access to significantly subsidised education and healthcare.
There are significant discounts that flow from being a pensioner. You can also travel at a reduced price and get discounts on utilities, rates and motor-vehicle registration too. You need to be a resident who has lived in Australia over a 10-year period to claim the Australian age pension. Once you tick the age and residency boxes, the amount payable is determined by means-testing of income and assets. This doesn’t include the family home.
Some people are also entitled to a concession card because their income is low, but this is not the only benefit Centrelink offers. There is also the pensioner concession card, which entitles seniors to a range of concessions because they may not be getting much income from the capital they hold.
If you’re not retired yet, you could be entitled to a disability support pension or a Newstart allowance. In addition, families could receive the Family Tax Benefit A and B if you’re on a low income.
If you’re living in a home and you have, say, half a million dollars, you may be entitled to a part age pension. This will depend on how your assets have been structured – for example, in super, shares, house and contents, a car and caravan.
We can help you optimise this structure. If there is an age gap in your relationship, it may be more beneficial for one partner to hold the assets than the other, for example. Another option is to spend some money on your home. If you’re not planning to leave your home, you might as well fix it up while you have the capital. This can be a benefit to you because your home is exempt from means testing and spending money on it may help you optimise your Centrelink benefits.
Structuring your retirement capital well can also give you choices. You can balance whether you should try to optimise your Centrelink opportunities by structuring your assets, or whether it’s better to just investment your money. In some situations the additional funds you might receive from the age pension may not be as beneficial as the income you could receive from an investment.
As an advisor, my role is to help people understand their options and make the best choices for their future. This may involve getting a range of benefits from Centrelink, or structuring their assets to make their most of investments. Everyone is different, but it’s important to know what your choices are from the outset.
Selva Kathiresan is a Senior Financial Advisor at Viridian Advisory
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