The decision to stop working a few years out from Age Pension age 67 and receive JobSeeker.

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 meet mutual obligation requirements which can be simply volunteering for 15 hours per week (see Services Australia website here).

This is what Client A decided to do and is now eligible due to their other assets and income to receive the full JobSeeker entitlement which is $18,798 p.a. This income then does not reduce Client B’s Age Pension so Client B is eligible for the full Age Pension now of $22,518.

Their total income is now $18,798 + $22,518 = $41,316 p.a. This is just over $6,000 less (i.e. $47,436 - $41,316) than what they were getting when Client A was working earning $30,000 p.a. In this situation though Client A was able to retire earlier, look after their health and still keep active somewhat doing some volunteering and get an income from Centrelink, Client B is able to get the maximum Age Pension and by Client A giving up a $30,000 p.a. salary, they are only about $6,000 p.a. worse off which in this instance I think is a good result. They also have sufficient assets to draw down on from superannuation to top up their income to meet their needs which is projected to last their statistical life expectancy.

Everyone’s situation is different and this article is general in nature so please don’t act on it as I have purposely left details out about their assets to keep it simple as behind the scenes I had to restructure some of their assets to get them the entitlement. My job is to take into account your goals and objectives, then plan the best path and give you options moving forward. Sometimes the options like this one although it isn’t the 100% better financial alternative (obviously the longer you work the more money you will have) but it was an alternative that allowed Client A to stop working earlier and still be in a good financial position.