Q: I am a beneficiary to a estate in New Zealand and my estimated share at this point in time is worth NZ$580,000 ($560,800). The property is not yet sold but should be marketed in the next few months. I am 71 and on a full Age Pension, living in Queensland.
My wife is due to receive her Age Pension in a few months but is on disability pension now. We own our property outright and have a car and the usual household goods.
Our home needs some maintenance that may amount to $100,000 and we need a new car and garage, which would possibly cost another $100,000 combined. This still leaves a considerable amount of cash assets when it eventuates and as I am financially ignorant, I worry where this will leave us pension wise. I can’t see us surviving on interest rates at present and have no idea how Centrelink is going to assess us.
Will I have to be reassessed every few months by Centrelink as our money is reduced due to property maintenance? Is there a better way than banks to earn enough interest for day to day expenses such as rates, vehicle regos, electricity etc.?
A: There are products such as annuities (a lifetime or fixed-term pension you buy to from a superfund to guarantee an income) that may assist your predicament, but these can be inflexible so you would need to take good financial advice before you contemplated one.
There are also managed funds that specialise in producing income, but they invest in shares so you would need to be prepared for fluctuations in the value. You could always fall back on an index fund – they are currently yielding around 4.2 per cent mainly franked, and by definition cannot go broke.
It may be helpful to read this answer I provided another Starts at 60 reader on Centrelink’s income and assets tests. Otherwise, my website has free calculators that let you enter your own financial details, such as the assets you’ll have and the income you may create, to see how it’ll impact your pension.
It may be worthwhile talking to a good adviser. Alternatively, Centrelink itself has a free financial advice service that can provide you with detailed guidance on how your inheritance may impact your pension, but it does require that you make an appointment.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial situation, objectives or needs. That means it’s not financial product advice and shouldn’t be relied upon as if it is. Before making a financial decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services advice.