When advisers become magicians with Centrelink

21 October 2020

 

 

Thinking about retirement? In your late 50’s or 60’s? Wondering if you can get some of that hard earned TAX money back via Centrelink and Aged Pension? BUT YOU have NO idea where to start.

 

 

Read on, as this article will help you get started.

Firstly, it gets complex and we won’t share with you all the details, however we will give you a few basic rules and an example.

 

 

This article is important as there are thousands of Australians who are in their 60’s and are missing out on Centrelink entitlements.

As financial advisers, we look after our clients’ best interests and we often see opportunities to reduce tax or increase Government benefits. We see it as our professional responsibility to show our clients how this can be achieved – legally of course.

 

 


Basic tests:

 

 

Age eligibility

 

 

 

 

Current asset test limit (maximum)

 

 

 

 

 

 

 

 

(Note: does not include your own home or superannuation assets if one spouse is under the aged pension age).

 

 

Let’s meet Peter and Sarah, they have just finished paying off their home loan and have decided to retire. Peter has just turned 66 and is now eligible to apply for a Centrelink aged pension. Sarah is 60 and has also decided to stop work so Peter and Sarah can travel in their retirement together. Peter has $500,000 in his superannuation pension account and Sarah has $400,000. They also have $200,000 in savings in a bank account and $50,000 in personal effects such as cars etc. So together they have $1,150,000 in assets. They are doing pretty well financially. However, under Centrelink assets test they are over the $876,500 asset test limit and Sarah is also not eligible under the age test. So right now, they are not eligible for any pension due to assets and Sarah, due to her age.

 

 

Most people in this situation would put their hat up and call it a day. As advisers, we ask what our client’s priorities are. Peter has health issues and so obtaining the Centrelink health care card would be a great advantage for them. So, a good adviser will consider options and strategies to assist them to obtain this government entitlement. At Kelly Wealth we LOVE helping . For us this is where the real strategy work comes into play with financial advice. We’re able to restructure assets, to Sarah (being younger), so they’re no longer counted towards their joint assets and Peter’s asset test.

 

 

But what is the end result? Well essentially this will allow Peter to be able to attain close to a full aged pension from Centrelink – approximately $900 per fortnight plus the very valuable Health Care Card. I’m sure at this point you have probably spat your tea all over your tablet and you’re asking yourself is that even LEGAL!? Well yes, it is. And yes – there is a catch. The catch is when Sarah becomes age eligible, (under current rules at age 67) they may no longer be eligible and lose all entitlements. But for the next 7 years, Peter’s pension may be close to totalling $163,800 plus all the other entitlements.

 

 

So, if you’re thinking of retiring in the next few years and wish to maximise your retirement with Kelly Wealth Services, give us a call today to organise an appointment with one of our Retirement specialists.

 

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