Aussies are living 10 years longer than we did 50 years ago with a combination of medical advancement, increased life expectancy and more active lifestyles well into retirement. Expectations of retirement are also higher, whether that be overseas travel, learning a new skill or spoiling the grandkids. This increases the need to look at ways of boosting your retirement savings before the need to draw an income from those assets.

Recent changes to boost retirement income may go at least some of the way to achieving your dream retirement and providing for a healthy, independent and good life in your later years. While there are some changes that affect self-funded retirees, the changes generally relate to those with Centrelink entitlements.

Here are the three main areas where changes have been introduced as of 1 July 2019.

Pension Work Bonus

If you receive the age pension or a Veterans Affairs pension, you can now earn up to $300 a fortnight (up from $250) without impacting on your Centrelink payment. Together with the income test free area of $174, this means singles can earn $472 a fortnight before your pension is affected.

The work bonus applies whether you are an employee or self-employed. And you don’t have to earn a maximum of $300 every fortnight. You can accumulate unused work bonus up to $7,800 (previously $6,500) and use this when you earn employment or business income in the future.

For instance, if you haven’t worked for a year, you accumulate $7,800 of unused work bonus. Then if you earn $4,000 for contract work over a six-week period, $4,000 of your accumulated work bonus (leaving a balance of $3,800) is used so your Centrelink payment will not be affected.

Not only can you improve your income, but you may also enjoy the stimulation of remaining in the workforce.

Pension Loans Scheme

Changes to the Pensions Loans Scheme mean that more people can tap into the equity in their home.

The fortnightly loan to boost income has been extended to apply to all age pensioners as well as self-funded retirees.

You can borrow up to 150 per cent (previously 100 per cent) of your maximum fortnightly pension rate to provide you with a better standard of living in retirement. The amount borrowed is secured by property you own in Australia.

The loan can be repaid at any time you choose, although it is recovered either when you sell the property or it’s sold from your estate (whichever comes first).

Currently retirees are charged a compounding variable interest rate of 5.25 per cent a year. The scheme is effectively a reverse mortgage facilitated by the government. Of course, such a loan will reduce your home equity, but it will give you added cash flow in the meantime.

New means testing of annuities

Changes have also been made to the treatment of pooled lifetime retirement income streams such as lifetime pensions, lifetime annuities both in and out of super and deferred lifetime annuities.

An annuity is a product where your money is pooled with other investors and a set amount is paid to you each year, usually for the rest of your life. The changes do not apply to account-based pensions or to annuities purchased before 1 July 2019.

Under the new rules, Centrelink will treat a fixed 60 per cent of all annuity payments as income. And for the assets test, it will assess 60 per cent of the nominal purchase price for the period until you are age 84 (for a minimum of five years) and after that 30 per cent for the rest of your life.

While the 60 per cent ruling may improve your circumstances, it won’t in all cases.

As the interest rate on annuities is set at the time of purchase, they are less attractive when interest rates are low. But there is an argument for investing part of your retirement savings in an annuity to give you guaranteed income on top of any Centrelink payments or a superannuation account-based pension that may not last your lifetime.

If you have or are considering an annuity, give us a call to discuss what works best for you and your situation.

These three changes are all aimed at giving you additional sources of stable income in retirement. If you would like to know more, give us a call or email admin@rpwealthmanagement.com.au

 

Our office is located in Oran Park and Sydney CBD, however we service the wider Macarthur and Western Sydney region with suburbs including Campbelltown, Liverpool, Parramatta, Penrith, Ryde and Homebush.

Ronald Pratap

Principal Financial Planner at RP Wealth Management | Financial Planning l SMSF I Insurance l Property Advisory. Our purpose is to provide our clients with sound advice and direction to assist with their financial affairs and help them make the best choices in achieving what is important to them.

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I had the pleasure of meeting Ronald for my first consultation and he explained everything step by step to myself whi has no financial/investing experience.I was terrified of making a move to seek financial advise and he simplified it for me the best he could and left me with comfort in making the right decision by approaching RP wealth management. I'm excited for the journey ahead of taking control of my finances.Thanks again Ronald
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Ronald is a very experienced Financial Advisor and very professional. Nothing is a trouble for him he goes over and above always being patient and explaining everything that is required for the client in their best interests. He is so knowledgeable and his presentations are amazing well set out and easy to understand. So glad we were referred to him he has helped myself and husband so much. 5 Stars for sure thanks Ronald.
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4 months ago I sought out advice on financial security, investments and retirement. At my 1st consultation I found Ron to be welcoming, friendly and professional. He was honest and upfront about the services he offered.Since then Ron and I have discussed options and strategies, combining my current financial situation and superannuation. His expertise, knowledge and access to a broad range of financial products helped in developing a personal customised plan.I'm very happy to recommend RP Wealth Management Ron and his team. They get 2 thumbs up from me.Thank you Ron for your support and guidance. I look forward to your continual advice in the future.
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Great team, very helpful.Ronald always goes out of his way to assist with any questions I have and there is constant engagement, great reporting and a real sense of the team being there to support and help you. I must admit I was sceptical about seeing a financial advisor, I had worried I was going to meet with some slick salesperson interested in cashing in on my inexperience and trying to sell me a bunch of things I didn't really need. Ronald was the complete opposite to this, he has been open and honest and genuinely interested in our goals, we will not be changing, and we will be sticking with the team at RP Wealth Management.
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Ron and team are very professional, patient and very transparent.Very happy to have found Ron and working on my needs.
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Ronald is very informative and professional and I have no hesitation to recommend him highly.
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Chris Bakalian
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Ron and the team are extremely professional and knowledgeable, complimented by exceptional customer service.
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Ron is honest, intelligent, trustworthy, and hardworking adviser. Always goes above and beyond to ensure he gets the best outcome for his clients. Highly recommended!
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Ron is amazing!! He is so easy to talk to and explains things so you can understand everything. If we had any questions about anything he was always there to answer our questions. Definitely recommend him.
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Ronald is a great person to deal with...explains everything very clearly and goes through all your options...looks out only for his client not any personal gain..I feel confidence that my wealth management and finances are handled correctly with his guidance
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Jordan Mijalkov
07:57 24 Sep 19
Ron and his team have a wealth of knowledge in the industry and have referred relatives and clients, whom have been satisfied with his service to ensure that they are adequately protected.
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Have had a great experience, have felt all meetings and communication to be very informative and honest in areas I was uncertain about.
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Ronald is so easy to deal with and helps you every step of the way to make it so efficient and quick to fill out paperwok. He is very professional and makes it all happen so quickly. He always picks up the call or gets back to you, What else can you ask for. Great guy and service
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Very professional and consistent in his work with truckloads of knowledge in his industry. He helped me with my life insurance and did a fantastic job from start to finish. Walking me through the entire process and always following me up. I would not hesitate for a second to recommend Ronald’s services to anyone. Great guy. Great professional. Great service.
Caterina Romeo
Caterina Romeo
01:07 18 Apr 18
I met Ronald in a professional capacity, and his willingness to share his insights and his enthusiasm for the work that he does clearly shines through. I'd highly recommend connecting with him if you're looking for an adviser who holds great integrity in the way they support their clients.
Shannyn Merlo
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08:32 23 Feb 18
Great service and very helpful
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01:25 27 Oct 17
Ronald is great communicator and very knowledgable with his financial advise. He helped my wife and I structure a better protection plan covering life insurance, trauma cover and income protection. Easy to discuss any questions we had and generally very helpful. I highly recommend talking with Ron!
James Newman
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03:38 25 Sep 17
Ronald is a really easy going guy to deal with. He will go above and beyond to ensure he finds out all the details and gets you the best cover for your circumstances. Ronald made the process of getting Trauma Insurance and Life Insurance very easy - much easier than I thought and it was surprisingly cheaper than I thought it would be too. I really recommend you see RP Wealth Management.
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05:55 28 Jul 17
I needed general financial advice and he delivered with the lingo I easily understood. Friendly guy and always approachable. Would highly recommend him to anyone!
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13:09 22 May 17
A hard working and diligent professional, Ronald certainly places his clients needs first in all situations. Keep up the good work!
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