Here’s the deal: If you’re edging close to retirement and planning to claim the Age Pension, you need to know exactly where you stand when it comes to your assets. The Australian Government sets strict limits, and anything over the threshold could mean losing out on the pension—or even a part of it.
But here’s the kicker: with smart strategies, you can reduce your assessable assets, boost your pension eligibility, and unlock more financial freedom. Let’s break it down.
Key Asset Thresholds (as of 20 September 2024)
To Receive a Full Pension:
Homeowner:
- Single: $314,000
- Couple (combined): $470,000
Non-Homeowner
- Single: $566,000
- Couple (combined): $722,000
To Qualify for a Part Pension:
Homeowner:
- Single: $695,500
- Couple (combined): $1,045,500
Non-Homeowner:
- Single: $947,500
- Couple (combined): $1,297,500
Pro Tip: Rent Assistance can push these thresholds higher, giving you even more room to qualify.
Game-Changing Asset Reduction Strategies
If you’re teetering on the edge of these thresholds, don’t panic. Here are six proven ways to reduce your assessable assets and potentially qualify for more pension.
1. Strategic Gifting
Want to help your family financially while reducing your asset base? You can gift up to $10,000 per financial year or $30,000 over five years without impacting your Age Pension. But go over these limits, and the excess will still count against your assets test for five years.
2. Renovate Your Home
Your primary residence is exempt from the assets test. By investing in home improvements, you not only add value to your property but also reduce assessable cash or other assets.
3. Repay Debt Against Exempt Assets
Got a mortgage on your home? Use assessable assets to pay it down. But keep this in mind: simply parking cash in an offset account doesn’t count—you need to actively repay the debt.
4. Prepay Funeral Costs or Buy a Funeral Bond
Plan ahead and reduce your assessable assets by either:
- Prepaying funeral expenses (unlimited amount).
- Investing up to $15,500 in a funeral bond (per person).
5. Contribute to a Younger Spouse’s Super
Got a younger spouse? Contribute funds to their super in the accumulation phase (if they’re under Age Pension age). These funds are excluded from the assets test until your spouse reaches pension age.
6. Purchase a Lifetime Income Stream
Invest in a lifetime annuity, which may qualify for concessional treatment under the assets test. Only 60% of the purchase price is assessed, dropping to 30% after age 84 (or five years post-purchase).
Why Should You Care?
Reducing your assets isn’t just about qualifying for the Age Pension—it’s about maximising your overall retirement income. But here’s the catch: If you don’t plan carefully, reducing your assets could leave you short in the long run, especially if unexpected expenses arise.
That’s why you need expert guidance to strike the perfect balance.
Take Action Now
Navigating the Age Pension rules can feel like a maze—but you don’t have to do it alone. Our team of experts at MW Group will help you craft a tailored strategy to reduce your assessable assets, maximise your pension, and secure a financially free retirement.
📞 Book a free strategy session today. Let us help you turn government rules into YOUR advantage.
Don’t wait until it’s too late—start securing your financial future today.
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