In case you hadn’t noticed there’s less than six months until the new year and that means it won’t be long before the Government’s changes to the asset test come into play.
What this means is that some of you might be affected by changes to the age pension, and while some recipients will get a boost to their fortnightly payment most will kick off 2017 wondering what has happened to your disposable income.
Before your festive season cheer gets dampened by the grinch though, there are a few things you can do to reduce the impact of the change.
1. Sort our your Centrelink
You want to provide Centrelink with the correct values for any assets that tend to depreciate in value. This will allow Centrelink to assess the net market value of those assets and remove any valid debts or burdens. It’s important that you are realistic when it comes to your estimates.
2. Put your house in order
You cannot assess fixtures or fittings within your home as an asset. Take a look around the house and get those things that need to be repaired of replaced sorted.
3. Your personal affairs also need to be in order
If you can’t remember the last time you reviewed your will (or worse, you don’t have one) now it a good time to do so. It’s also the right time to consider investing in funeral costs that will otherwise be carried by your loved ones. That’s not to say you’re going to drop off your perch tomorrow, but having a plan in place is important. What you’ll want to also consider is engaging a financial professional to assist you with your decision before you hand over any money.
4. Long-term earnings need to be considered
Specifically, you’ll want to think about those things generating an income for you for a period greater than five years. It all comes back to Centrelink and how it assesses your income stream’s asset value. If you’re getting a return of capital at the end of each payment term the asset value won’t be assessed lower than that amount.
5. Take advantage of your spouse… If you have one
If by some stroke of good fortune your spouse or partner hasn’t reached the pension qualifying age (i.e. they are born after July 1, 1952) you should consider placing funds in the accumulation phase within their super. Things to consider if wanting to take advantage of this opportunity are your overall cashflow, the tax rate on investment earnings in their super account, and what restrictions you might face if wanting to access those funds.
Read more: Age pension payments and partner age
6. Get charitable
In case you didn’t know, you can gift up to $10,000 each financial year without Centrelink smacking you on the hands. There is an overall limit of $30,000 in gifts over a five-year period, which you also need to be mindful of.