Can I retire now?
An article caught our eye this week from financial commentator Nick Bruining from Western Australia.
Nick writes in the West Australian “Every now and then the tedium of being a financial planner is broken by a client’s jaw dropping and their adopting a wide-eyed look of wonder.”
What brings on these reactions is the client being told they might well be financially better off retiring than continuing with the daily grind.
This is the result of our nation having a retirement system that is not only one of the world’s most complicated, but also one of the most generous.
That complication results in misunderstandings about the rules, including how they are particularly generous for people battling into their senior years.
Let’s take the real life example of a couple with a combined total of $227,000 in savings, that was battling along with the bloke as a supervisor at 67.
He stumped up every day to a small manufacturing business east of Perth. He was struggling on a gross income of $63,000 and salary-sacrificing $800 a fortnight into super because that’s what he could afford and thought he should do. The take-home pay was a little over $35,000 a year.
Some sensible advice that involved half an hour dispelling the myths and making a few changes revealed that were he to retire the following Friday, the combined total income would be $45,252.
That is $10,000 a year more than when working and he would enjoy savings of just under $1800 a year on medicines, water, rates, power and transport. Sure, it combined Centrelink age pension with payments from their super but they never realised what was possible.
There is misinformation such as we have to stop work to start accessing benefits from Centrelink, or that concessions and discounts on rates and other government charges only apply when we are retired.
A couple can, for example, earn up to $88,992 as a combination of employment earnings deemed income and still receive a part-pension and the all-important pension concession cards. There’s no requirement to stop work to claim. It is whether you come under the income test and asset test thresholds.
So, like our dear old couple have discovered, get facts from people who know how the system works. Centrelink is a great starting point. A competent specialist retirement financial adviser is another. These are the ones who can work out your Centrelink entitlements to the dollar then and there and don’t simply flick you off to your local welfare office to find out yourself. Believe me, it is worth the effort.
