The proposed changes in regards to the age pension announced in the 2015 Budget do not come into effect until the 01/07/2017.
Also, keep in mind that the Government will debate these measures this week so they could end up different to the announcement.
However, based on the Budget papers below is a summary of how it might affect you and what you should look to do before 2017.
The key measures in the Age Pension are as follows:
1. Age Pension age will increase to 70 years old from 2035. Therefore, if you were born in 1965, you would need to work until age 70 before you can receive the age pension.
2. From the 01/07/2017, the Age Pension will be indexed in line with CPI.
3. Assets test is reduced; this will reduce your ability to receive an age pension or part pension. These amounts include super, links to information below.
a. Couple homeowner the limit is $800,000
b. Couple non-homeowner the limit is $1 million
c. Single homeowner the limit is $500,000
d. Single non-homeowner the limit is $700,000
Below are the links to changes to the asset test, so you can see how it may affect you.
The takeaway message for these changes to the Age Pension will depend on your age and financial situation:
1. If born after 1965 (less than 50) then you need to save now or be prepared to work until age 70. At present, the best way to do this is superannuation. You will still be able to access your superannuation at age 60, but you will need to have enough to see you through to age 70. If you wish to retire before age 60, then you need to have savings outside of superannuation as well.
2. If were born before 1958 (so aged 57 or above) you need to review your superannuation situation. You may no longer be entitled to an Age Pension as such you need to review your situation. This could mean:
a. Working longer
b. Strategy to reduce your assets
What is clear is the Government will require you to spend your savings in retirement before you will receive an age pension.
Now is a good time to take stock and see what these changes will mean for you.
If you need more information on the above please call us on (07) 4771 4577.