Navigating the complexities of retirement finances can be a daunting task, especially when it comes to understanding how personal assets impact pension eligibility. A recent case involving an elderly couple with a substantial share portfolio has ignited a fiery debate across Australia, highlighting the challenges and misconceptions surrounding the pension system.
The couple in question, both in their 90s, found themselves on the brink of losing their part-age pension due to the growth of their nearly $900,000 share portfolio. This situation has raised eyebrows and sparked discussions about wealth, entitlement, and the purpose of the pension system.
In Australia, the age pension serves as a safety net for those who have reached the qualifying age of 67 and is designed to support retirees who do not have sufficient income or assets to provide for their own retirement. The maximum fortnightly payment for a single person is $1,144.40, and $1,725.20 for a couple. However, these payments are subject to an assets test, which reduces the pension amount by 50 cents for every dollar of income over $212 per fortnight for an individual.
For homeowners, the asset threshold for a full pension is $470,000 for a couple, while those on a part pension can have up to $1,045,500 in assets before their payments are cancelled. The couple’s concern was that their growing wealth could disqualify them from receiving pension benefits, including crucial medical benefits that many pensioners rely on.
In response to their dilemma, financial columnist Noel Whittaker suggested several strategies to legally reduce their assessable assets, such as valuing personal belongings at garage sale prices, prepaying for funerals, renovating their home, and gifting money to their children within the legal limits.
The story, once shared on social media, quickly became a hot topic. Some accused the couple of greed, arguing that their assets were more than sufficient to fund their retirement without the need for a pension. Others speculated that it was the couple’s children who were more concerned about preserving their inheritance rather than the welfare of their parents.
However, many also defended the couple, pointing out that the age pension is often viewed as a right by those who have worked and paid taxes their entire lives. The fear of losing pension benefits, particularly medical benefits, can be a significant concern for older Australians who see the pension as a return on their lifelong contributions to society.
The debate also sheds light on the broader issue of retirement readiness in Australia. According to the ATO, as of the 2021 financial year, the average super fund balance for women aged 65-69 was $403,038, and $453,075 for men. The Association of Superannuation Funds of Australia (ASFA) suggests that a comfortable retirement standard requires a balance of $595,000 for a single person or $690,000 for a couple.
Yet, research from Finder indicates that many Australians are unprepared for retirement, with 23 per cent of surveyed individuals admitting to insufficient funds in their super or other investments. An additional 27 per cent were unsure if they would have enough to sustain themselves post-retirement.
To avoid finding oneself in a similar predicament as the elderly couple, financial experts like Taylor Blackburn from Finder recommend consolidating super funds to reduce fees and considering salary sacrificing to boost retirement savings. Starting early and taking advantage of compounding interest can make a significant difference in the long run.
We invite our readers to share their thoughts and experiences with retirement planning. Have you faced similar challenges with pension eligibility? What steps have you taken to secure your financial future? Join the conversation below and let us know how you’re navigating the road to retirement.
Also read: Will your retirement savings last?
This story needs more info, I assume the couple is not in care yet. As from June 2025 the RAD (refundable accomadation deposits) for selfunded retirees amount goes up to a maximum $750,000 so if one of the 2 goes into care the person left at home will receive a large portion of the pension. Also if both go into care there will be not enough to cover the maximum reduced daily costs for aged care (house sale may help). So $900,000 is excellent for pension benfits living at home, however when there are still a couple alive and go into care, finances change with regards to assests/income tests.
Legally v Morally – that the question facing many older Australians who want to build their wealth to leave to their children/ grandchildren be it a the now valued 1 million + family home or the beachfront holiday home or their swrude investment in CBA initial public offering along with other investment portfolio.
There are millions of asset rich working class out there and then there are millions of hungry eager offspring waiting for an early inheritance.
Like I told everyone in 2020 – early inheritance is now possible and now both sides of government now appreciate that the massive amount of public funds needed to pay for the increasing budgets for welfare, healthcare etc can be reduced with selective culling with COVID 2.0 now the the government will change in January 2025 as well in our country next year to facilitate this culling with a vengeance
With surplus money from the decrease in boomers – the government can fund Stage 4 tax and franking credits as well as the world most generous FBT can be kept in place for future generations
It’s win win for Liberals when the country is flooded as the offspring offload their inheritance for cash
Massive confusion. The work bonus as I understand it is $11,400 per year. However every stat quoted is different. Here it is quoted as $212 per fortnight = $5,512 per year. Some clarity PLEASE………!
You are both confused. The author is talking about the asset test then switches to the income test – “…assets test, which reduces the pension amount by 50 cents for every dollar of income over $212 per fortnight for an individual.” Peter is compounding the confusion by introducing the Work Bonus which acts as an additional threshold to the income test
Media keep missing the point – the new disastrous Aged “Care” system. On behalf of all Australians, I implore journalists to publicise the following nasty secret.
Potentially a 100% Death Tax, payable before death. As the Royal Commission puts it, a Tax on Frailty.
Nobody knows, because it hasn’t been discussed in public, that older Australians now face an horrific new scheme outweighing all other expenses by far, for most of us entailing loss of all super and other savings.
The odds are high that as of 80 yo Australians will find themselves committed to a nursing home. Frailty, dementia, a stroke, a fall? …Gotcha!
Even if totally incapacitated you will have to pay the nursing home owner (increasingly a foreign wealth fund) a RAD (refundable accommodation deposit), officially described as a compulsory interest-free loan.
The benchmark RAD was recently boosted to $750,000. Owners can and do apply for more, so that $1 million or even $2 million can be demanded.
For the couple in this case $900,000 may very well not cover the RAD, especially if both become inmates of a nursing home.
In any case the money in the RAD is dead to the couple – no interest return. In fact, the proprietors siphon off an annual percentage, currently 2% but owners want more and will probably get it.
The median super for Australians over 65 is about $200,000. Less for women.
Hence for 50% of us, no hope of paying the RAD, so we must pay the DAP (Daily Accommodation Payment). The DAP is currently 8.38% annual interest on the RAD –
Eg $83,800 per annum. This is not covered by the”Lifetime Cap”, so continues until your super and savings are sucked dry.
Critics of the couple in question make a fundamental error – they forget that in retirement you no longer receive a wage. You have to extract an income from whatever savings you have scraped together, so those savings must be conserved.
It’s like crossing the Nullarbor with a jerrycan of water that cannot be replenished or replaced.
In the featured couple’s case $900,000 will give them an income of $36,000 to $45,000 (with luck). Not a high income. They are not wealthy, particularly when huge aged care imposts are taken into account.
Some commentators unconsciously project their own circumstances on retirees – the critics are probably younger and receiving a wage, in which case $900,000 is indeed a handy sum, a disposable bonus, which if depleted will not impoverish them. There is always new money coming in.
Retirees in stark contrast face everybody’s nightmare coming true – they will be destitute in their old age, when most in need of funds for health expenses.
Please bear the above in mind before joining pile-on. It’s bizarre that both major parties oppose taxes on billionaires as “Class Warfare” or the “Politics of Envy” – but at the same time joyfully savage older Australians of more modest means.
The new Aged Care rules are horrendous for most of us that are self-funded. We do not have a lot of funds but too much to get any aged pension. Our income for our assets is, now interest rates have risen, just in line with receiving the OAP for a couple.
Voluntary Assisted Dying, for those eligible, will possibly become more prevalent as a way to overcome the new Aged Care rules.
The govt now calls the pension WELFARE which comes from the goodness of their heart when in fact it is paid for by workers’ taxes, about 5.6% (from memory) which went into a separate pension fund for your retirement. True to form govt could not keep their hands of the humongous pot of money and it was Malcolm Fraser who rolled it into consolidated revenue and so it has become ‘welfare’. And then of course there is the ‘means test’, unlucky to have too much money? no pension, even though you contributed…..
Here we have the paradox of perceived wealth. The perceived value of the residential home should have no bearing on the assessment for pension. It generates no income for the residents neither immediately nor in the long term if they have no intention of selling it.
The same for a portfolio of shares. It doesn’t make any difference if they skyrocket in market value as they sit in their portfolio. The dividend that they may pay is not automatically going up simply because their value goes up. That is based on the profitability of the company that issued them.
When they do pay a dividend, should that income be assessed as averaged over the year, or simply as a once only for that one fortnight?
As I understand it, be very wary about the profit that may be made if a share holder sells shares at a profit as the ATO may see that as pure profit and reach out for a 20% portion regardless.
As an acquaintance once found, the ATO is waiting and watching and will call in what they see as owing to them at a time not convenient to the shareholder.
In the case above the assets are in a liquid form and also would produce some income from dividends. Whilst they may wish to retain assets for their children they still have an income. In my case I did not have the opportunity to accumulate superannuation, my retirement funds are in one investment property in regional Australia. The net income is about 1.5% of the Centerlink valuation. I cannot sell the house as the tenant has been in the property for over 20 years. So I am in the position of significantly reduce aged pension, very little income from the property and cannot access my retirement funds. My wife is not of pensionable age but when she does become eligible for the pension it will mean two of us that cannot get a decent income from aged pension and still not able to access the funds I provided for my retirement. Even if I did evict the tenant they have nowhere to go and may possibly have to live in a caravan. The government needs to build more housing commission houses.