Robert's Retirement Blog

It is always a consideration of health being number one and then finances come second with when you decide to retire and if you can do it a bit earlier. In this article I am going to look at a recent client situation where Client A who is 65 and Client B is 67 are a married couple living together and how when Client A is working still earning $30,000 p.a. and how that affect’s Client B’s age pension entitlement.

Currently when Client A is earning $30,000 p.a. That will mean that Client B is only eligible for a total of approximately $17,436 p.a. of Age Pension instead of the full Age Pension being $22,518 p.a.

That means currently their total household income is $30,000 p.a. (Client A’s work) + $17,436 (Client B’s Age Pension) = $47,436 p.a.

Noting this doesn’t include any superannuation income streams I have setup for them to top up their income. I am just trying to focus on work income and Centrelink entitlements in this example.

Now Client A decided to retire early which dropped their income to $0. They then moved on to what is called the “JobSeeker” entitlement from Centrelink. This has very different rules for different age categories, it is also means tested. For Australian’s over the age of 60 – to be eligible you have to …

Superannuation is a choice and like anything that we can choose, consumers (including me!) like to research things online before we spend money on anything. One thing that consumers do is compare returns from month to month, year to year, 10 years to 10 years of various super funds. Obviously returns is one of the key reasons to invest your money (i.e. your taking risk on your money and you want to make sure that whoever is looking after it is giving you something back in return that is the same if not better than others!).

However, it shouldn’t be the only deciding factor and returns quoted can differ from fund to fund making it harder to compare. One fund I deal with a lot in South Australia is SuperSA Triple S, now consumers get caught sometimes comparing returns to other super funds (and when I say other super funds I am referring to a standard accumulation where concessional contributions, earnings etc are taxed on the way in). SuperSA Triple S is different where employer contributions and earnings don’t get taxed until the end i.e. upon roll out or retirement for example.

What is the tax rate? Well, it can be up to 15% on unrealised gains and income. So this means that looking at SuperSA Triple S and their returns, you are …

For those already on an Age Pension, it is important to update Centrelink on a regular basis with changes in your situation. It is optional to notify them of smaller changes which they identify as below:

• car, boat, real estate or personal effects of $1,000 or less
• shares, investments, bank balances or loan of $2,000 or less.

However, anything larger – needs to be updated with them within 14 days of the change occurring. You are required to tell them about any significant changes, i.e. your income or assets change, you start working, or you change addresses. Please see a full list of what to tell them here.

A lot of the time the updates can be done online, however – as I work with clients and their Centrelink a lot of the time, even though you tell them when it happens straight away online (which fulfills your obligation), Centrelink may take some time (even months to process it). Now the best course of action is to get it sorted straight away with Centrelink so you are getting your correct entitlement as you can be missing out on extra income or have to back pay them if your assets increase!

An example is if you have $10,000 in a bank account (that Centrelink already know about) – then you decide to go spend the $10,000 on a …

I have made another blog post in the past about another super fund’s “Balanced” option. Note – these blogs are just general in nature and not advice, all I am trying to do is highlight that what something looks like on the outside, isn’t always the case on the inside. Case in hand this time is First Super.

Their “Balanced” option highlights as per the below that their fund contains 66% growth assets and defensive of 34%. This actually doesn’t sound too bad compared to other “Balanced” fund’s on the market in terms of it doesn’t carry as many growth assets as others.

However, when we actually drill into the pie chart and the breakdown, I believe they are misinterpreting what is a defensive asset (which they think is 66% as noted above).

When I look at the pie chart below I can really only see 3 defensive assets totalling 24% - i.e. Cash (4%), Australian Fixed Income (10%) and International Fixed Income (10%).

Again, people/companies can call a growth asset what they want and a defensive asset what they want – whether it is right or not is up for interpretation.

After a quick google search of the Moneysmart government website – their interpretation of a defensive and a growth asset aligns with mine as below:

Again, I am not …

For those who have worked in the South Australian Government before or know someone that has – you might have heard of SuperSA Triple S Scheme which is the default superannuation account for new employees in the SA Government. Although this news I am about to share has been around for a few years now – there are still a lot of new client enquiries I get who aren’t aware of the changes.

Essentially previously to 30th of November 2022, if you were employed by the SA State Government, they had to contribute your employer super contributions to the Triple S scheme. So, for example if you were a nurse working 3 days per week for the SA Government and then 2 days per week in the private sector, you would essentially need to carry two superannuation funds. However as per their notice that was communicated back in September 2022 (see here) from the 30th of November 2022 onwards, employees now have more choices.

One of the changes that are now available is that being an SA Government employee – your SA Government contributions don’t have to go towards your Triple S account now and you can choose any other complying accumulation fund. Now this can be a benefit in some scenarios so you aren’t carrying multiple super funds. However, it is …

Centrelink, specifically the age pension rules for those over age 67 can be quite confusing, that is why it is important to get professional advice around your individual situation. There are a lot of rules. For example, the pension is means tested where your level of assets and income determine how much age pension you get paid.

For this blog, if I will just focus on the income test. There are many different types of assessable income (see here for the full list). In the interest of simplicity I am just going to focus on employment income only in this blog and not consider any other sources of income.

Currently, as a single person you can earn up to $212 per fortnight and get the full age pension, it starts to reduce by 50 cents for every dollar over this threshold and cuts off completely at $2,500.80 per fortnight. For a couple (combined) you can earn up to $372 per fortnight and get the full age pension, it starts to reduce by 25 cents (each) for every dollar over this threshold and cuts off completely at $3,822.40 per fortnight.

It may seem that you can’t earn a lot, but this doesn’t take into account something called the “Work Bonus”. It is an extra “free” allowance of work income you can earn before your age pension starts …

The transfer balance cap relates to the amount of money you can have in retirement in an account-based pension. This cap was first legislated on the 1st of July 2017 and started off at $1,600,000.

If we go back to the benefits of an account-based pension, they are really simple from a tax perspective meaning everything that is earnt within the pension fund from a capital or income perspective is tax free. The government thought that it was a bit too lenient allowing people with more than $1.6 million in pension phase to benefit from a 0% tax environment, which is why they brought this legislation in place. My thoughts are they brought this in place as they believe (whether right or wrong) that $1.6 million should be enough for someone’s retirement and the superannuation/pension environment is there to fund someone’s retirement only which is why there are tax concessions (not as a wealth transfer vehicle or to build more wealth you can ever spend in retirement).

Fast forward to the 2024/2025 financial year and the current transfer balance cap is $1.9 million. Then recently following the release of the December 2024 CPI (Consumer Price Index), it is expected to now increase to $2 million from 1st of July 2025. This will later be …

Keeping an investment property in retirement has a number of considerations ranging from taxation issues to Centrelink issues. They can be a great source of income and growth but again, it is all dependent on the individual asset you own and like anything whether that be shares, managed funds or cash – they all have different risk and return characteristics.

One thing to consider with property is liquidity in retirement. Note – the following example is really simplified but let’s say you have an $800,000 property that is paying you $600 per week in net rent (about $31,200 p.a.) and that meets your living expenses fine. Then what happens if you need to replace the ducted air conditioner in the property costing $10,000 or you might need a new car yourself of let’s say $30,000?

Unless you have liquid cash assets outside of your property then you can’t sell a portion of the investment property overnight to fund your purchases (whereas if you have other more liquid assets like some managed funds / cash – then you can sell a portion of these assets overnight).

It really depends on your situation if property is right for you and what you want to gain out of it in retirement. Let’s say your goal is capital growth and you plan to keep it …

Whilst in accumulation phase, superannuation funds can account for tax differently and there is not a one size fits all. What tax do funds pay? Well, they pay usually 10% on capital gains (if held longer than 12 months) and 15% on other income and concessional contributions (within limits). They are also entitled to tax deductions – for example certain fees and insurance premiums.

A few examples of the different tax structures can be found in an SMSF or a “Wrap” super fund where it is “individualised”, or in an industry fund it is generally “pooled” and there are also other funds like SuperSA Triple S here in South Australia where it is “untaxed”.

An “individualised” structure means your fund does a tax return each financial year, and you pay the exact tax you are supposed to pay based on what has gone in and out of your account.

A “pooled” structure means you aren’t necessarily paying the tax based on your current situation, industry funds generally use this method and can “pool” gains and expenses and split them between members, in some cases this can work better for you and other cases it might not work better for you.

A “untaxed” structure means that the fund isn’t paying ANY tax along the way – therefore when you leave/exit …

The goal posts with superannuation like everything in life do change.

It is interesting to look back at what they have been in the past which in some instances seem quite generous (see the ATO link here). For example, in the financial year 2007/2008, if you were over 50 years old, you could contribution $100,000 concessionally into superannuation. This is quite a lot for an annual amount, they later reduced this amount. In the last 10 financial years the maximum has been $35,000 p.a. and the lowest has been $25,000 p.a.

Currently at the time of writing the annual limit is $30,000 p.a.

However, depending on your situation – you may be able to contribute more than this concessionally into superannuation. One way is using the “unused concessional cap carry-forward” rule. This was brought in from the 1st of July 2018. The first year you can use unused amounts is the 2019-2020 financial year. This will allow you to “look back” and contribute amounts you previously haven’t concessionally up to previous years’ limits. There are a few contingency’s around this like your total superannuation balance as at 30 June of the previous financial year needs to be under $500,000 and a maximum “look back” period of 5 years.

Keeping in mind, the …