Planning for Centrelink Benefits Through Strategic Asset Reallocation for a 60s Couple
Background: Meet Jenny and Ben
Jenny and Ben, a couple in their early 60s, approached Yield Financial Planning as they were preparing to transition into retirement. Having built their wealth over many years, they owned a home in Melbourne’s south-eastern suburbs and a beloved beach house where they hoped to spend more of their time.
As they approached this next life chapter, Jenny and Ben wanted to simplify their finances, understand how to best structure their assets for retirement, and ensure their income needs would be met for the long term. They also wanted to make smart decisions around selling their primary residence, relocating to the coast, and purchasing a smaller city apartment for occasional visits.
Key Results at a Glance
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Age pension:Restructured assets to secure eligibility for the Age Pension for 5 years.
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Estate Tax Savings:Reduced potential estate taxes by $82,000.
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Property Planning:Successfully balanced lifestyle and finances by restructuring property holdings for beach and city living.
Why Did They Seek Advice?
- Gain clarity on how their financial position would look in retirement.
- Understand the best way to structure their assets to optimise income and reduce tax.
- Explore eligibility for the Centrelink Age Pension and related benefits.
- Plan their property transitions between the family home, beach house, and city apartment.
- Minimise estate taxes for non-dependent beneficiaries.
- Build confidence that their lifestyle and income goals could be sustained throughout retirement.
Strategies Implemented
There were many moving parts in the advice we prepared for Jenny and Ben, including detailed scenario modelling to determine the most effective way to structure their assets and properties. Below are some of the key strategies we implemented to help them transition confidently into retirement.
Property Advice:
- We advised Jenny and Ben to sell their home in Metro/South Eastern Melbourne suburbs, allowing them to relocate more permanently to their beach house, a key lifestyle goal for retirement.
- At the same time, we recommended purchasing a small one-bedroom apartment in the city to use as a city pad for weekend visits.
- This strategy offered both lifestyle flexibility and financial balance, supporting their transition into retirement with confidence.
Age Pension:
- Due to a five-year age difference between Jenny (60) and Ben (65), we restructured their assets to make Ben eligible for the Centrelink Age Pension for five years, versus not being eligible at all before our advice.
- This reorganisation provided a low-risk way to enhance their retirement income, effectively reducing reliance on market performance and improving overall financial security.
Super Re-Contribution Strategy:
- By taking advantage of the non-concessional contribution limits, we reduced potential estate tax from an estimated $104,000 to $22,000. This saved approximately $82,000 without taking on additional investment risk.
Retirement Position and Cash Flow Management:
- Our modelling provided a clear view of their financial position in retirement, confirming that their accumulated assets and investment strategy would comfortably support their desired lifestyle.
Outcomes and Benefits
- Improved financial security through eligibility for the Age Pension, adding a stable income stream and reducing market dependency.
- Reduced potential estate taxes by $82,000, preserving more wealth for their beneficiaries.
- Successfully restructured their property holdings, allowing them to enjoy coastal living at their beach home while maintaining a convenient city base.
- Clear understanding of their long-term retirement position, giving them confidence and peace of mind to move forward with their lifestyle plans.
- Simplified financial structure and improved cash flow management for greater flexibility and ease.
Key Takeaway
Jenny and Ben’s story shows the value of thorough, expert advice. The re-contribution strategy we implemented is one that many financial planners may miss, either because they are unaware of it, it takes too much effort, or it doesn’t generate fees. At Yield, we always aim to do the most for our clients and work closely with their other advisors to make sure every opportunity is explored.
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Important Note
Produced with our client’s permission. Names within this case study have been changed to protect the client’s right to privacy. The content of this case study has been based on a real-life client. 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.
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