Age Pension – don’t set and forget!

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Applying for an age pension is not an easy task.

There is a comprehensive application form and depending on your circumstances, numerous documents that need to be photocopied and lodged as well.

If an application is successful and the age pension is granted, many age pensioners never want to deal with Centrelink again.

It is extremely important for age pensioner to remember they have a legal obligation to notify Centrelink, within a 14 day period, of any change in their circumstances or assets.

The following is not a full list of changes in circumstances but provides examples of events when a pensioner is required to notify to Centrelink;

  • buy or sell shares or managed investments
  • open new bank accounts
  • have combined assets of more than the amount currently being assessed
  • receive a lump sum amount or one-off payment, e.g. inheritance
  • move into or out of a nursing home, hostel or retirement village
  • are charged with an offence and placed in prison or admitted to a psychiatric institution
  • gift more than $10,000 worth of assets in an income year
  • changes their employment
  • travel overseas for a period of more than 6 weeks
  • marry, separate, divorce, or become widowed
  • rent or sell their home, or purchases another

Centrelink review the value of share and managed funds automatically twice a year, in March and September. However, to ensure an age pension is being assessed correctly, it is extremely important for pensioners to notify Centrelink if they buy new investments or sell investments to pay expenses, or to travel.

It is also important to remember that if you fail to notify Centrelink of changes in your circumstances and Centrelink discovers they have overpaid the pension, they will raise the overpayment from the date the change was effective. On the other hand, if Centrelink becomes aware of a person’s pension being underpaid because of a change which was not notified or notified late, they will only adjust the pension from the date they became aware of the change and not from when the change actually took effect.

So, what is the best way of keeping Centrelink informed? Going into the local Centrelink office, or speaking to someone on the phone can seem either too daunting or requires the patience of a saint.

The best place to start is to establish an online ‘myGov’ account and link your Centrelink account.

 

Source:  Mark Teale | Centrepoint Alliance

Aged Care Loans

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Australia has an ageing population that will continue to grow significantly over the next 25 years. Approximately $3 billion per annum is already required to fund individuals moving into aged care facilities. The ability to fund entry to an aged care facility will become an important one for your customers.

Most individuals have to pay a Refundable Accommodation Deposit (RAD) commonly exceeding $500,000. How to fund this deposit can be difficult, stressful and most often at a time when a decision needs to be made quickly.

Click on the video below to see how an Aged Care Loan can help fund the RAD and also keep the family home. This flexible solution gives the breathing space to consider financial needs and decide what financial requirements will best suit the family.

Source: LaTrobe Financial

Retirement is not that simple!

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Most people dream of the stress-free and simple life that retirement brings, however just how stress-free and simple will retirement be.

For most of us, by the time we retire, we would have dealt with all the stress, the high blood pressure and emotions that one would normally face over a period of 40 plus working years.  Regardless of the type of work you have performed – whether you were self-employed, a professional, a public servant, tradesperson, or a labourer – without a doubt you would have been confronted with many decisions and challenges work brings.

This level of work stress is compounded further by the ongoing issues of family life.

From having children and riding the bumps through the different stages of their lives to saving for a deposit to buy a home.

After you have survived this period of your life, retirement should be easy and certainly stress-free. You own your home and the last of the children have moved out and there is no longer a drain on your bank balance.

Life should now be simple…

Not quite as now you have a new set of things to worry about, like Do I have enough superannuation to keep me in the lifestyle I would like to achieve in retirement? Do I qualify for the age pension or the Commonwealth Seniors Health Card? What happens if I am not able to look after myself? Will I be able to afford care and the necessary medical assistance?

So what can a person do to try and reduce the level of stress in retirement?

A financial expert or adviser will understand the legislation and how much you will need in your retirement.  They can educate you not only during retirement but more importantly, they can help you take the correct steps before you reach retirement age.

 

Source:  Mark Teale | Centrepoint Alliance

Are you adjusting your retirement expectations?

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A recent global survey conducted by HSBC[1]  found that only 21% of working age Australians believe they will be financially comfortable in retirement!

In fact, the report suggests, of those surveyed,

  • 58% believe they will have to work longer and continue working to some extent in retirement
  • 75% were willing to defer retirement for two years in order to have a better retirement
  • 65% are concerned about declining state pensions, like the Australian Age Pension because of mounting national debt and an ageing population.

This report paints a rather bleak picture of the future, not only for the baby-boomer generation, but also for Generation X (1966 – 1979), and Millennials (1980 – 1997).

The report sets out some practical steps when planning for retirement. While these are more directed towards the Millennials, I believe they apply to all generations:

  • Be realistic – start saving earlier, and save more
  • Consider different sources of funding – balance savings to spread risks and maximise returns
  • Plan for the unexpected – include worst case scenarios when planning
  • Embrace new technology – use online planning tools, and seek professional advice.

While on the topic of retirement planning, the Association of Superannuation Funds of Australia has just released its March 2017 Quarter Retirement Standard figures.

The March 2017 figures show a small increase in costs over the previous quarter’s figures. The factors that led to the most recent increases included petrol, medical services and electricity. Offsetting that were savings in international travel and accommodation, and fruit, with a small fall in clothing and footwear reflecting discounting during the post-Christmas sales.

The Retirement Standard budgets for March 2017 are:

Couple Single Female
Comfortable Modest Comfortable Modest
Weekly $1,150.13 $668.45 $837.41 $465.07
Annual $59,971 $34,855 $43,665 $24,250

So, my tips for those who are considering retirement in the foreseeable future;

  1. Consider deferring retirement if possible – even if it means continuing to work on a part-time basis for a while
  2. Understand exactly how much it will cost you to live in retirement – prepare a realistic budget, and account for contingencies (like new hot water system, or roof repairs)
  3. Know what government benefits you are entitled to
  4. Seek some really good financial advice from a financial planner experienced in retirement advice

As was highlighted in the HSBC report, starting to save earlier, and saving more, will be the secret to being best placed to enjoy the type of retirement you have always dreamed of.

 [1] Reproduced with permission from The Future of Retirement Shifting sands, published in 2017 by HSBC Holdings plc.

 

Source:  Peter Kelly | Centrepoint Alliance