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Book a FREE consultation
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Get started with a free strategy consultation and receive a copy of the Good Fortune Guide – written by James McFall, Managing Director Yield™ FP and 2020 National Finalist Certified Financial Planner of the Year to help educate you on your Financial Plan.

Great news for retirees – The Government have made deeming rate changes!

Man at beach benefiting from Deeming Rate Changes
Retirement Planning Successful retirement planning requires your investments to last your entire life after-work, which requires a long term and well thought out structure for you to achieve this.

The Government have made deeming rate changes and for the first time in a long time, they’ve made them better!

 

You may not know this, but when Centrelink are assessing the income a retiree earns on their investments, they don’t directly assess the income that financial assets produce, but instead Centrelink will “Deem” financial assets to earn a set rate of return.

 

The benefit of deeming financial assets are that:

 

  • It helps to keep payments steady instead of going up and down based on investment returns;

  • Provides an incentive to invest, as any interest rate achieved above the deeming rate doesn’t count as income.

The deeming rate is considered to be a notional return of a variety of asset classes and will change from time to time due to changing economic conditions. As such recently the Australian government has cut the deeming rates from 1.75% to 1.00% for the lower threshold and 3.25% to 3.00% for the upper threshold.

 

The main motivation for this change is the result of subsequent RBA Cash rate cuts. Most recently down to 1%.

 

The table below shows the deeming rates pre change:

The table below shows the deeming rate changes after the change, which apply from 01/07/2019:

 

To illustrate how this may positively impact a person’s pension, we’ve provided an example below:

 

John is a 66 year old single retiree who earns $15,000 p.a. from some casual work he does form time to time. John also own his own home.

 

His assets are as follows:

 

  • Residence $1,200,000

  • Car $20,000

  • Contents $10,000

  • Super $300,000.

 

Understanding how to maximise Age Pension entitlement could positively impact your retirement and at the end of the day, maximising what you are entitled to is simply smart money management.

 

At Yield we enable Australians to live the life they love now and retire securely and we’d welcome the opportunity to review whether you are receiving all of the Centrelink entitlements you are eligible to and to discuss ways to improve your retirement position.

 

Click here to read more about how we can assist you to Retire Securely.

Yield Financial Planning is Here to Help

We hope this blog provided you with some clarity in regards to the recent rate changes. If you have any questions or queries about the topics explored above, please reach out to our team of industry experts here at Yield.

Important Note
Any information provided here is general advice only and does not consider your objectives, financial situation or needs. This information should not be taken as comprehensive and does not constitute legal or financial advice. You should seek legal, financial or other professional advice before relying on any content. Yield Financial Planning is not responsible to you or anyone else for any loss suffered in connection with the use of this information. Information is only current at the date initially published.

About Yield™ - Financial Planner Melbourne

Who we serve – We help time poor professionals and business owners who intuitively know they should be doing more to improve their financial position and are seeking an expert to guide them on financial planning strategies. Our clients want personalised financial planning advice and to feel empowered and confident that they can achieve a secure transition to retirement.

What we do – We gain a deep understanding of your current financial position and preferences, what you value and want to achieve. We then help you develop a highly personalised financial plan, to show you how to make your money work harder for you. Ongoing we regularly monitor and measure progress against your plan projections, to show you how you’re tracking and help you manage change to your advantage.

How we do it – We apply our proven expertise in investment markets (Shares & Property), Tax and Debt structuring, Retirement Planning, Risk management and Estate planning, to help you reorganise the way you use your money to achieve your desired outcomes.

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