Most people plan to retire between the ages 65 and 66, and surprisingly, despite growing superannuation balances, the Age Pension remains the main source of income for many retirees.
Since it being just over 62 years on average in 2004, the intended retirement age has increased significantly in the last two decades.
Australian Bureau of Statistics (ABS) figures show that, in 2022-23, a government pension or allowance was still the main source of personal retirement income. This was followed by super, an annuity or private pension.
More than 60 per cent of those aged over 65 years were receiving the Pension in 2021.
Are you eligible?
It is important to remember that, while you may not meet the eligibility requirements today, you may qualify later in life.
In 2021, only 44 per cent of people aged 65-69 received either full or part Age Pensions. While for those aged 80-84 years this statistic increased to 81 per cent.
You are generally eligible for the Age Pension if you:
- are over 67 years old (depending on when you were born)
- are an Australian resident and have lived in Australia for at least 10 years
- can meet an income and assets test
What are the income and assets tests?
The Age Pension means tests consider your income and the value of any assets you own. If the value of your income and assets exceed certain limits, your payment will be reduced.
Income includes money from a job (including salary packaging), other pensions or annuities, earnings from investments and any earnings outside of Australia.
Assets are items of value you or your partner own or have an interest in, such as investment properties and artworks; caravans, cars, and boats; shares; and business assets. While your family home isn’t included in the assets test, your pension may be affected if you decide to sell it.
Can you still work?
Singles can earn up to $212.00 per fortnight without their pension being affected. For every dollar over that amount, their pension will be reduced by 50 cents. Couples can earn up to $372.00 per fortnight and for every dollar over that amount, 25 cents in the dollar will be deducted from their pension payment.
If your income in a fortnight goes over a certain amount, you will not receive a pension payment. This cut-off amount is $2,500.80 for a single person and a combined $3,833.40 for a couple. There are other higher cut-off allowances for those affected by ill-health.
The Work Bonus may help you earn more from working without reducing your pension. You don’t need to apply for it, the Bonus will be automatically applied to your eligible income – you just need to declare your income.
What does the Age Pension pay?
There are different rates of pension for singles and couples.
The current maximum basic rate for a single person is $1,047.10 per fortnight. A couple would receive $1,578.60 per fortnight. With extra supplements, those on a full Pension could receive a fortnightly total of $1,144.40 for singles and $1,725.20 for couples.
Next steps
To support you in comfortably enjoying your retirement, please speak with your local Nexia Adviser about your eligibility for the age pension and other possible government entitlements.
