‘Will I get the pension if I use my superannuation to pay off my mortgage?’

Feb 05, 2020
This reader is juggling several different income streams such as work, superannuation and inheritance. So will they get the pension? Source: Getty.

A: I’m looking to retire early in 2021, when I’m 67. I currently have a property worth $350,000-$400,000, with a mortgage currently sitting at $241,000, although I’m looking to use my superannuation and the remainder of my income from working this year to pay off a large chunk. That means I’m not sure what the balance will be when I retire.

I also anticipate I’ll receive an inheritance payment of about $150,000. I have no other investments or properties to my name and I am in a relationship but not married. How will Centrelink look at this and will I qualify for any Age Pension?

Q: I assume the property you mention is your residence, so it’s an exempt asset. As a single homeowner, you can have $263,250 worth of assessable assets without losing any pension under the assets test. You can also earn $174 a fortnight, which includes deemed income on your financial assets (these include superannuation and bank accounts), before you start to lose any pension under the income test. You can read more about how the assets test and income test work here.

I suggest you go to my website and have a play with the Age Pension calculator and the deeming calculator which may make it clearer for you. The deeming calculator will tell you that you would need financial assets of $185,000 to reach $174 a fortnight. So, on the information provided, it would appear you will qualify for a full Age Pension.

The above comments are applicable to a single homeowner i.e. someone who lives alone in their home.

But you mention you may be in a relationship, although the nature of your relationship isn’t clear from your question – so you would need to take advice because your partner’s financial situation will be taken into account when your pension application is being assessed. This could have a positive or negative affect on your pension depending on your partner’s assets and income. You could seek guidance from the government’s free Financial Information Service, which will advise on your particular circumstances and how they may impact the Age Pension.

If you have a question for Starts at 60’s money experts, email it to [email protected].

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.

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Have you or will you retire with a mortgage? How has that impacted you?

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