Volume 9 Edition 9 Financial Care Services Newsletter

Online at Permalink: https://financialcareservices.com.au/newsletters/vol-9-ed-9/ ‎

Financial Care Services, the specialist adviser to seniors in transition to new lifestyles

Volume 9 Edition 9 – 30 September 2019

Income support for a dignified retirement

Australian Social Security provides tax payer funded income support to long term Australian residents who have limited financial resources. Centrelink manage the payment of Social Security benefits.

Centrelink income support is to cover basic living expenses only. The level of Centrelink benefits does not allow for you to ‘save’ money. You cannot expect to make significant mortgage repayments out of your Centrelink income support benefits.

Therefore, paying off your home mortgage before you stop earning could be smart. Your objective could be to clear your mortgage before age 60. An unplanned early exit from the workforce could spoil your retirement plans.

Permanent Australian residents who were born before 1954 can apply for an Age Pension now. But people born in 1954 must wait until next year to apply for an Age Pension after reaching age 66 years.

The full rate of Age Pension would finance a very modest style of living in a home that you own. But you might not be eligible for the full rate of Age Pension if you have significant assets or other income.

Before you make an application to Centrelink for an Age Pension you can check if you are eligible for an Age Pension. You might only be eligible for a Commonwealth Seniors Health Card which needs a different Centrelink claim form from the Age Pension.

Christine at Financial Care Services offers Short Consultations for ‘personal financial factual information’ to help you check your financial position against the means tests for an Age Pension or Commonwealth Seniors Health Card.

You can start the by emailing for Christine for her Client Services Guide and the Financial Care Services Age Pension Data form.
The fee for a Short Consultation 45 minutes in person or by telephone and/or email for ‘personal financial factual information’ is $99.

But what if you have to retire early

Early retired and incapacitated for part time work

If you are disabled to the extent that you cannot work 15 hours per week then you could apply for the Disability Support Pension (DSP). DSP is paid at the same rates and subject to the same means testing rules as the Age Pension.

But if you are ‘legally blind’ then you can have the full rate of DSP or Age Pension, without any financial means testing.

Early retired whilst still capable of working at least part time

Seniors can find themselves involuntarily retired at age sixty; too young for an Age Pension, too healthy for DSP but ‘too old’ for a ‘youth’ focused workforce.

As a society, Australia ensures a basic level of income support for all citizens. If you are early retired but without financial resources then Centrelink would usually pay you a NewStart Allowance.

NewStart Allowance for mature aged adults

The single person rate of NewStart is only $559.00 per fortnight. This funds only a very frugal lifestyle.

The Health Card provided to NewStart recipients attracts the health benefits and utility bill discounts of a Pensioner Concession Card.
But Health Card holders might not be allowed any ‘Pensioner’ discounts on Municipal Rates and registration fees.

Once you have attained age 60 years and have been on Centrelink income support, NewStart, for at least 39 weeks then you could have your single rate of payment increased to $604.70 per fortnight. This rate of Allowance is still substantially below the Age Pension rate for a single person.

NewStart has a liquid assets test. Your NewStart Allowance could be deferred if are single and have at least $5,500 of money available immediately.
Your NewStart payments could also be deferred if you were paid a lump sum in respect of accrued annual leave or long service leave.

The NewStart Income Test starts to reduce your payment rate once your income reaches $104 per fortnight. But overall you could be better off taking any available casual work and receiving a lower NewStart payment.

NewStart recipients must engage in Centrelink approved work related activities. For example, as a senior you could apply for jobs, work as a causal or participate in voluntary services in your community. Every fortnight NewStart recipients must tell Centrelink what they have earned and what they have been doing workwise.

Age Pension for single seniors

The full rate of Age Pension increased by 0.8% effective 20 September 2019.

The new rate of Age Pension is $850.40 per fortnight for a single person.

A single person can only be paid the full rate of Age Pension if her income is no more than $174 per fortnight and her assets do not exceed $473,750. If she owns her own home then the asset level for a full Age Pension is only $263,250.

Each extra one dollar of income reduces her Age Pension by fifty cents under the Income Test.
Each additional one thousand dollars of assets reduces here Age Pension by three dollars per fortnight under the Asset Test.

Centrelink assess each applicant under the Income Test and under the Assets Test. Whichever Test hits you the hardest is the Test that will apply to your potential Age Pension.

Under the Income Test, a single person could have an income of $1,872 per fortnight, $48,690 per Centrelink ‘year’, and be entitled to one dollar per fortnight of Age Pension. But if her assets are more than $756,800, or $546,300 together with her home, then the Assets Test would exclude her from any Age Pension.

The Pension Supplements totaling $83.00 per fortnight are payable to single people who are receiving at least one dollar per fortnight of Age Pension. All Centrelink Pensioners get a Pensioner Concession Card.

Thus the maximum payment to a single Age Pensioner is $933.40 per fortnight of Age Pension and Supplements.

Age Pension for partnered seniors

The maximum amount of Age Pension for each member of a couple at Centrelink increased to $641.00 per fortnight. Pension Supplements of $62.50 are payable to each Age Pensioner member of a couple.

Remember at Centrelink a ‘couple’ is any two adults who share domestic arrangements and present socially as a couple.
You cannot be treated as a ‘single’ person at Centrelink just because you and your domestic partner choose to keep your finances separate.

Couples can have $308 per fortnight of income before the Income Test bites. If the total combined income of the couple exceeds $2,868.40 per fortnight, $74,560 per Centrelink ‘year’, then the Income Test excludes them from any Age Pension.

The couples’ Asset Test allowances are $605,000 or $394,500 together with a home. If your assets exceed $1,031,000 as non-homeowners or $821,100 plus a home, then you will not be eligible for any Age Pension.

Age Pension for partnered seniors separated by illness

Once one member of a couple enters residential aged care then they become a ‘couple separated by illness’. Each member of a couple separated by illness is entitled to the single rate of Age Pension adjusted according to the couples Asset and Income Tests.

The maximum amount of Age Pension for each member of a ‘couple separated by illness’ at Centrelink increased to $850.40 per fortnight. Pension Supplements of $83.00 are payable to each Age Pensioner member of a couple.

Couples can have $308 per fortnight of income before the Income Test bites. If the total combined income of the ‘couple separated by illness’ exceeds $3,705.60 per fortnight, $96,340 per Centrelink ‘year’, then the Income Test excludes them from any Age Pension.

The couples’ Asset Test allowances are $605,000 or $394,500 together with a home. If the assets of a ‘couple separated by illness’ exceed $1,171,200 as non-homeowners or $960,700 plus a home, then they will not be eligible for any Age Pension.

Estimating your potential Age Pension rate.

You could use the Centrelink Pension Estimator provided that you understood the income and asset definitions.

The less stressful option is to arrange a ‘personal financial factual information’ Consultation with Christine at Financial Care Services. Christine is experienced with Centrelink Pension Applications and the many Centrelink financial means tests.

Christine could also assist you with collating your personal data, estimating how much Pension or Carer Payment 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.

Christine at Financial Care Services your independent adviser

Financial Care Services is an independent advisory service specialising in retirees of modest means and aged care entrants. Our core values include working with clients in claiming DVA and Centrelink entitlements.

The team at Financial Care Services are here to answer your Age Pension questions and guide your understanding of aged care costs. Help with Centrelink challenges is available from Christine Hopper at Financial Care Services, the specialist adviser to seniors in transition to new lifestyles.

Christine charges fees based on the work involved in advising you about pensions and aged care fee solutions.

To make an appointment for confidential, independent and professional advice about aged care, retirement lifestyle costs, granny flat or Age Pension issues please contact Christine Hopper or call +61 3 9808 0338.

______________________________

Christine Hopper
Financial Care Services Pty Ltd
Independent aged care, strategic lifestyle and Social Security advice for seniors in Melbourne, Victoria, Australia
Telephone – call +61 3 9808 0338
Email – contact info@financialcareservices.com.au
Address – mail to 172 Warrigal Road, Camberwell Victoria 3124
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Disclaimer: The information contained in this newsletter is of a general nature only and does not constitute “financial advice”.
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.