Australia’s Age Pension is intended to protect seniors from living in poverty if they have no resources of their own to use. However, the amount of Age Pension payable is reduced from the full rate if the senior has assets or other income above certain levels.
There’s more to life than money, but understanding some basic concepts helps lay the foundations for a lifetime of learning that helps you better manage your financial affairs.
A growing number of people are retiring outside of Australia, with some Asian countries being popular choices. For some, it’s because the cost of living is much lower there. Others are moving back to where they lived during an earlier phase of life.
Centrelink uses a process that assesses both your assets and your income and whichever test reduces your age pension rate the most is what is means tested. In other words, the test that hits you the hardest is the means test applied.
Australia’s Age Pension, with pensioner discounts, is intended to finance a basic standard of living for people who have retired because of disability or old age. The objective of the system is to provide a basic standard of living. It isn’t intended as a means of accruing wealth.
Having recently travelled overseas, I couldn’t fail to appreciate how small and largely insignificant Australia is in the investment world. But the key drivers of future investment returns for Australian investors are collectively classified as global themes.
‘No debt should last longer than the person who created it.’ That comment from Jim Prigg—CEO of Knowledgemaster Pty Ltd—made me think about the importance of planning for the unexpected.
With the Age Pension, payment rates and means testing arrangements are different for ‘members of a couple’ and ‘single’ people. ‘Homeowners’ and ‘non-homeowners’ also have different means-tested allowances.
How soon should you start saving for retirement? Answer: The earlier the better. And there are figures that confirm that. There is a well-recognised process leading up to retirement. What follows is an adaptation of a number of countdown steps for finances that I used in my book ‘Retirement Ready?’.
The Australian Social Security system ensures that citizens have the financial resources for at least a frugal, minimal standard of living when they’re unable to earn an income from work. In this, the second, and final, post about the Australian Age Pension and residency, the focus is on checks that applicants are really part of the Australian community.