Over two million seniors rely on the Age Pension for retirement income, according to the Australian Institute of Health and Welfare (AIHW). Currently, you can start receiving the pension at age 66.5, but by the middle of 2023, you’ll need to be 67 or older.
Right now, the maximum payment (with supplements) for a single person is $987.60 per fortnight and $1,488.80 per fortnight for a couple.
While these amounts may not be enough as a sole source of income, the Age Pension can help ease your finances. This is especially true now that more and more senior pensioners are feeling the pinch because of the fast-rising cost of living in the country. Therefore, finding ways to maximise Age Pension payments is a worthwhile pursuit.
Below are three tips to maximise your Age Pension.
1. Calculate the value of your personal assets based on market prices.
The assets test and the income test serve as the foundation for determining a person’s Age Pension eligibility.
As part of the assets test, Centrelink considers the value of financial assets such as financial investments and debts owed to you, as well as personal assets. These include furniture, jewellery, laptops, automobiles, caravans and boats that you own.
The market value of your personal assets is a factor that Centrelink considers when evaluating your application for the Age Pension. Your asset market value refers to how much your possessions are worth if you try to sell them on eBay or conduct a garage sale.
The worth of your personal possessions can be shockingly modest when seen through this lens. Therefore, do some research to help determine the true market value of your own assets. The lower the value of your personal assets, the higher your pension can be.
2. Regularly update asset values.
Personal possessions — such as cars, boats, computers, etc. — typically lose their value over time.
Just keep in mind that you’re responsible for recalculating and updating the recorded value of your assets, not Centrelink. You can boost your pension if you make it a practice to appraise asset values and report them to Centrelink at least once a year.
3. Pay off your debts.
Reducing debt and avoiding paying interest are major benefits of debt repayment. After retirement, paying off debts may also raise pension payouts as it decreases the number of assessable assets (because you paid off your personal debt). As a result, one can automatically qualify for more pension.
Age Pension is not the magical key to a comfortable retirement. However, it can help supplement your superannuation and other income sources during retirement, so it makes sense to do what you can to increase it.
For other tips to maximise your Age Pension, speak to your financial adviser.
If this article has inspired you to think about your own unique situation and, more importantly, what you and your family are going through right now, please contact your advice professional.