Nearing Retirement Age? What Do The Changes To The Age Pension Mean For You?

The share market has closed slightly higher following a lead from Wall Street. Investors have still been cautious ahead of the US and Japanese monetary policy statements being released in the coming days. Most Australian investors shrugged off the Reserve Bank board meeting minutes which pointed to a neutral monetary policy outlook until economic data changed either way.

What does this mean for you?

There are some changes in the air for the financial strategy of those nearing retirement. Last week we heard the government has scrapped the proposed $500,000 non-concessional lifetime super contribution limit, and instead replaced it with an annual non-concessional limit of $100,000 when super balances are under $1.6 million. These changes will take effect from 1 July 2017.
Next month more than 690,000 people will receive letters from the Federal Government warning them they could lose all or part of their age pension. Yesterday, the Government unveiled a further tightening of aged care eligibility. On January 1, couples with assets worth more than $816,000, down from $823,000, will lose every cent of their pension. Single pensioners who own their home will lose payments if they have assets worth $542,500, down from the $547,000 envisaged when the changes were unveiled last year. This means it's important to have the bulk of your retirement investments held in something that you'll be able to draw an income from on a regular basis. Keep non-financial asset balances such as cars and caravans to a minimum.

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