How to make the most of the age pension

  The Government Age Pension might not seem like much to get by, but if you combine it with a


The Government Age Pension might not seem like much to get by, but if you combine it with a regular income from your super fund, you may find things a little easier.

All it takes is a little planning: learning how much you’re really entitled to, how much you can supplement it, and how you can subtly combine it with your super and other government benefits to achieve a better fortnightly income.

Government Age Pension: knowing the basics

If you were born before 1952, you can qualify for an Age Pension via Centrelink from the age of 65. If you were born after 1957, you can begin to claim it at 67. (Those born in between can learn their starting point here.) 

The current basic rate for a single pensioner can be as little as $34.40 per fortnight or as much as $794.80. If you have a partner who is also on the pension, each of you is entitled to anywhere between $25.90 and $599.10 per fortnight.

Your income and assets are the biggest factors shaping your pension eligibility.

For every dollar you earn over $164 (every $292 for a couple combined), your pension will be reduced by 50 cents.

 By drawing down on your super in regular amounts and intervals of your choosing, you can effectively “top up” the pension to reach your desired amount.

This may seem like it’s eating into your hard-earned savings, but drawing small, well-planned amounts will ensure the balance of your money continues to be invested, potentially earning you more in the long run.

What if I’m earning too much?

You may still qualify if you salary sacrifice a portion of your income directly into super, then drawn on it as a retirement income stream. (This is known as a Transition to Retirement strategy, and regardless of pension eligibility, the tax benefits can make a significant difference to your long-term savings.)

If you aren’t eligible for the pension, a retirement income stream could serve as an ideal replacement income – especially as the balance can remain in super, continuing to work hard.

Finding the right balance can take some careful planning, but it’s not a journey you need to take alone. Most super funds will be able to offer a financial advisor who can look at the big picture and suggest the best next step. 

Some upcoming changes may make it easier for those just over the limit. If you own a home and your assets are valued at over $209,000, your pension will be reduced – if not outright disqualified. However, from the 1st of January 2017, this cap will be raised to $250,000. 

Once again, your super fund may be the best way to truly understand all the variables that could be affecting pension eligibility, and whether or not this situation can be changed.

What other ways can I supplement my pension? 

In addition to the base pension (and a retirement income stream from your super fund), you may also be entitled to up to $65 per fortnight in pension supplements ($49 each for a couple). This includes additional allowances from Centrelink that cover pharmaceutical needs, utility fees and general household living costs.

You may also be eligible for rent assistance on top of the age pension – up to $130.60 per fortnight, depending on your circumstances.

You can also get an additional $14.10 ($10.60 each per couple per fortnight) if you qualify for a clean energy supplement.

Robbie Campo, Deputy Chief Executive at Industry Super Australia, says that while the pension and its supplements might not be enough, “combining them with an income stream can give you far better retirement outcomes”.

“By drawing on your super in regular increments, you can enjoy an immediate uplift in your standard of living, but keep the peace of mind that your super balance is still being invested.”

“If your super balance isn’t as large as you would like, it can still serve you very well an effective, long-lasting top-up to your Age Pension.” 

Click here to start getting more out of your Age Pension. 

  1. Pamela  

    Finding it tough to live on a pension?

    Share accommodation with a friend!

    It halves so many expenses for your both!

    • Pamela, what a great coment, instead of complaining about being unable to live on the pension, you have made a positive coment on how to make life easier, well done.

  2. Carol Homann  

    We live out of our vegetable garden to a large extend, don’t do dairy at all, became vegetarian a long time ago, Cook multi meals at a time, live out of our deep freeze, fridge and pantry until they are empty, and I mean empty, before we do our once a month shopping trip to town.
    It saves heaps of money!

    • What I find really matters is if a person on a pension has their needs met before their wants. I can live well on my aged Pension. I do not feel deprived because I have made choices where I can cut costs. I don’t eat any animal protein, I am a vegan. I use public transport, so no longer have the high cost of having a car. I live in a retirement village where I pay affordable rent, my home is small but enough for me, living alone. I do love to give gifts to my family and friends and make most of these, myself. I do not know how people on a pension can afford the hobbies that are costly. I recycle and many of my recycled items make interesting gifts. I do not belong to any clubs, or groups as they can become expensive. I don’t consume alcohol at all and limit coffee and tea to one per day. Water is my drink of choice. I do not go to the cinema, I like to watch movies from bigpond instead. I still make small donations to charities. I communicate mostly via internet. I am happy and content.

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