By Liz Maroney, Westlawn Senior Wealth Adviser 14 April 2014
In 2009, the government announced that from 1 July 2017 the pension age will gradually increase. So if you’re thinking of retiring over the next few years, you need to know what to expect and how it could affect you.
Right now, Australians can qualify for the Age Pension as soon as they turn 65 (or 64 and 6 months for women born before 1 January 1949). But that’s all set to change very soon.
Between 2017 and 2023, the qualifying age for the pension will gradually rise, increasing by 6 months every 2 years. And with 75% of Australians over 65 relying on a full or part pension to get by, it could have a big impact on your retirement plans.
How will this affect me?
It all depends on when you were born. Here’s a summary of the qualifying ages:
Date of birth
1 July 1952 to 31 December 1953
65 years and 6 months
1 January 1954 to 30 June 1955
1 July 1955 to 31 December 1956
66 years and 6 months
From 1 January 1957
Your age isn’t the only factor to take into account. Your income, assets, living situation, relationship status and super savings could all affect your pension entitlements.
The good news is that you may still be able to earn an income without missing out on your pension entitlements. Under the government’s Work Bonus Scheme, if you choose to continue working after retirement age, you can earn $250 a fortnight before it affects your Age Pension.
Will I need to work for longer?
This depends. If you’re planning to rely on the Age Pension when you retire, then you may need to continue working until the new pension age. But if you have plenty of super to draw on, it shouldn’t really affect your retirement plans.
Remember, these changes have no effect on your super. You can still start to access your super savings as soon as you reach your preservation age – which is currently 55 for anyone born before 1 July 1960. So if you’re planning to retire before 67, it could be time to start boosting your super savings.
If you’re still working after 55, you may be able to start drawing on your super through a transition to retirement (TTR) strategy, which can have potential tax benefits. This could help you maintain your income while boosting your super at the same time. But the TTR rules are complex and this strategy won’t necessarily suit everyone so make sure you get advice.
To find out more about the pension changes and how they could affect you, contact your Westlawn Wealth Adviser today.
General Advice Warning The advice on this site may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial, tax and/or legal advice prior to acting on this information.
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