Volume 5 Edition 7 Financial Care Services Newsletter
FINANCIAL CARE SERVICES
Independent aged care, lifestyle and financial advice for seniors
Volume 5 Edition 7 –31 July 2015
A new financial year with an ongoing retirement funding challenge
Advance planning is needed if you are looking ahead to being financially secure to enjoy a comfortable lifestyle in retirement. So what would a comfortable retirement cost?
The Retirement Standard is an illustration of retirement living costs based on what real retirees actually spend.
The cost of a ‘comfortable’ lifestyle would be substantially more than the total income of a full Age Pensioner. If your income were just sufficient to pay for a comfortable lifestyle then you might be eligible for a small part Age Pension under current Centrelink rules.
A new financial year with Centrelink Pensions sufficient for a homeowner couple’s modest lifestyle. The maximum combined payment for a homeowner couple is $1296.80 per fortnight, that is, $33,716 per year. This income level is similar to the Retirement Standard for a modest lifestyle for a couple living together.
But for a single homeowner, the maximum Centrelink Pension payment is now $860.20 per fortnight, that is, $22,365 per year. The full rate of Age Pension provides for only a frugal lifestyle for younger single retiree homeowners.
Pensioners who rent privately could be eligible for some Rent Assistance but their overall financial position could be very constrained.
Therefore if you are hoping for a financially comfortable retirement then you might need to actively plan ahead.
A new financial year with slightly higher Centrelink means test allowances
The full rate of Pension is only available to retirees with limited income and a modest asset level. The means testing system reduces the amount of Pension payable to retirees with other resources.
The Centrelink Pension Allowances that are the starting points for the Income Test and Assets Tests amounts increased slightly on 1 July 2015. Thus a Centrelink Pensioner could have a little more Income and a few more Assets before her Pension is reduced.
Income Test for Centrelink DSP and Age Pensions and DVA Service Pension
For a Single Pensioner, the Income Allowance has increased by two dollars per fortnight to $162 per fortnight.
If a Single Pensioner has more than $162 per fortnight of Income at Centrelink, then her Age Pension could be reduced by fifty cents for each additional dollar of income over $162 per fortnight. Once her income at Centrelink exceeds $1,724.40 per fortnight, $44,830 per year, she would not be entitled to any Pension.
The Couples Income Allowance increased to $288 per fortnight. Thus a ‘couple at Centrelink’ would be excluded from any Pension if their total joint combined income at Centrelink exceeded $2,642.40 per fortnight, $68,700 per year.
Asset Test for Centrelink DSP and Age Pensions and DVA Service Pension
The Asset Test reduces the amount of Pension by $1.50 per fortnight, $39 per year, for each additional $1,000 of Assets over the relevant Allowance.
A Pensioner Couple could have Assets of $291,500 in addition to their home, before the Asset Test starts to impact. A couple living together in their own home could have additional Assets of $1,076,000 and each retain one dollar per fortnight of Age Pension plus the full couple rate of Pension Supplements provided that the Income Test had not excluded them from the Age Pension.
Read more about the Centrelink Pension means tests Allowances and cut off levels.
Once one or both of the means tests exclude you from the Pension you would lose the Pension Supplements and no longer qualify for the Pensioner Concession Card. The Commonwealth Seniors Health Care Card provides some pharmaceutical benefit concessions for retirees with modest incomes.
Small increases in deeming rate changeover levels
At Centrelink and DVA, your ‘income from financial assets’ is determined use ‘deeming’ rather than actual income received. Whilst the deeming rates were last revised in March 2015, the changeover points were increased slightly effective July 2015.
The July 2015 Deemed Income from financial assets for a single pensioner is calculated as 1.75% per annum on the first $48,600 of financial assets plus 3.25% per annum on any balance above $48,600.
The July 2015 Deemed Income from financial assets for a Couple at Centrelink is calculated as 1.75% per annum on the first $80,600 of the combined financial assets of the couple plus 3.25% per annum on any balance above $80,600.
Centrelink, or DVA, will determine eligibility for and the amounts of any DSP Age or Service Pension based on the regulations in force at the time of your application.
Help is available. Financial Care Services offers a special $99 Short Consultation to illustrate how much Age Pension you would receive based on your personal data.
Financial Care Services offers Short Consultations to help you check your financial position against the Centrelink financial means tests for an Age Pension, DSP or a Carer Payment.
Christine could also assist you with collating your personal data, estimating how much Pension you could expect to receive and completing the Centrelink forms for you to sign. Normal hourly rate consultation fees apply for assistance with personal data collation, completing Centrelink forms and attendance at a Centrelink office with you.
Minor adjustments to means tested aged care fees
Careful readers of aged care invoices could notice a small change in the means tested care fees from July 2015.
Aged care residents who are paying the full cost for their nursing care and personal support would notice a 2.5% increase in their care fee. This increase reflects the increase in the ACFI subsidy rates payable to aged care providers. The annual and lifetime caps on aged care fees were last increased in March 2015 and are expected to be adjusted again in September 2105.
Aged care residents who are paying a means tested amount of care fee could see a small reduction in the means tested care fee that reflects the small increases in the Age Pension means test allowances effective from July 2015.
Centrelink advise the resident’s financial administrators whenever a means tested fee changes. The attorney/administrator for an aged care resident is responsible for updating Centrelink or DVA, whenever the resident’s financial resources or asset amounts change.
The system of fees and charges for aged care is complex. A consultation with Christine at Financial Care Services could assist you to understand the levels of fees and charges that could apply to your family member. Together we could plan to arrange the available assets to cover the aged care costs. Contact us to make an enquiry for independent aged care financial advice.
Financial Care Services is an independent aged care financial advisory service specialising in aged care entrants and retirees with modest financial resources.
Financial Care Services core value in financial advice is to assist with your money plan in the responsible management of your assets to generate the cash flow needed for your lifetime planning. Christine at Financial Care Services understands both the DVA and Centrelink Pensions systems and the Commonwealth aged care fee arrangements.
If you would like further confidential, independent and professional advice about Centrelink, lifestyle or financial issues please contact Christine Hopper or call 03 9808 0338.
Financial Care Services Pty Ltd
Independent aged care, lifestyle and financial advice for seniors in Melbourne, Victoria, Australia
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299570 (check this at www.search.asic.gov.au/fsr/flb.html)
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252529 (check this at www.search.asic.gov.au/fsr/far.html)
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Disclaimer: The information contained in this newsletter is of a general nature only and does not constitute “financial advice”. You should obtain your own personal financial advice before investing any money or moving in to any retirement village, lifestyle community or aged care facility. Financial Care Services is licensed to provide financial advice to individual clients based on their personal situations.
All eligibility for Commonwealth benefits will be determined by Centrelink or DVA, based on your personal position as documented and the legislation and Regulations in force at that time.
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