Over the past 10 years, the rules for Centrelink have changed considerably. They are set to change again in January 2017 (read our article ‘Changes to the Centrelink Age Pension rules — will you be affected?‘), however, many people nearing retirement don’t understand how Centrelink may fit into their retirement plan.
Get the Centrelink Benefits You Deserve
Cuts, cuts, cuts, is what we hear in the media.
One of the positives about the changes to the Centrelink Age Pension, is that it is now actually more straightforward than it was in the past to receive the benefits you deserve. Quality retirement planning must therefore make whatever you have accumulated work as hard and as long as possible, to complement any possible Centrelink entitlement.
If you are nearing retirement and are worried you have not accumulated enough, you may well be eligible for a Centrelink contribution, such as the Centrelink Age Pension. You may be eligible either immediately when you retire, or at some stage throughout retirement.
Understandably, it is generally a worrying time for people as you near retirement. It’s confronting that it will not be long before you cannot meet your basic needs, let alone your more extravagant ones, such as travel. From independently earning income to instead needing to rely on what you have accumulated through life.
Centrelink, with all of its changes, will factor in how much in assets you have and how much income you earn. Once you become eligible, it is only necessary to know when to apply.
Include Centrelink in Your Financial Plan
Where a financial plan is so valuable for pre-retirees and those of you moving into retirement is that we consider Centrelink entitlements into the future. As Centrelink is a moving target and is prone to change, it is reasonably safe to assume there will be some ongoing Centrelink support and therefore reviewing how retirement could look with present entitlements considered, can give a huge amount of peace of mind and confidence.
One thing seldom spoken about is that income needs are usually not the same for the whole of retirement and yet this is how income projection calculators work. They just work on how much you want to retire on, then factor in an inflation increase to life expectancy.
In reality, most people have greater income needs between retirement and about 80 years of age, while their health and fitness is better. Spending needs gradually reduce after age 80 due to decreased mobility.
For this reason, we work with our clients to understand what their specific needs are. The better we understand how you envisage retirement could be, the better we are able to tailor our financial modelling for you, to meet what you want for your retirement, not just a one dimensional one size fits all approach.
This is an important point for retirement planning and an important point for understanding how Centrelink factors into your retirement. Depending on what your starting need is for income, Centrelink can transition over time to make up say 10% of your income and increase to say 80%, but still support an income that is not too dissimilar to what the median income for a couple is.
How you plan for your retirement and how you structure your assets to meet your longer term financial needs could make a big difference to whether you have enough in retirement, and certainly to your peace of mind throughout retirement.
Yield Financial Planning is Here to Help
As Financial Planners, the team at Yield are specialists in navigating the rules and eligibility criteria of Centrelink benefits. We incorporate eligibility to Centrelink entitlements into our financial plans. If you are interested in discussing a financial plan, please contact us.
Want to Learn More About the Centrelink Age Pension?
We’re lucky to be joined by Prashant Nagarajan at our Age Pension seminar in Melbourne on Wednesday 20th July. Come along for more tips, advice and information about the Centrelink Age Pension and upcoming changes. (This seminar is now closed.)
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.