How might this affect your retirement?
Let’s start by considering the role the Age Pensions plays in helping older Australians fund their retirements. (Just a note that people often refer to the Aged Pension, but it’s official name is Age Pension, so that’s worth bearing that in mind if you’re Googling information!) First introduced in the early 1900s, the pension was established as a safety net for ordinary Australians, to ensure that they did not fall into poverty when they could no longer work. The Australian Age Pension remains a significant support for most retired Australians. According to Treasury’s Retirement Income Review (2020), about 67% of Australians start their retirement with an Age Pension entitlement. By the time they are in their 80s, about 80% of Australians receive a full or part-Age Pension.How much does the Age Pension pay?
Here are the latest (March 2024) rates for a full Age Pension. They have increased from the 20 September 2023 rates so that singles can expect a total increase of $19.60 a fortnight and couples can expect a (combined) total increase of $29.40 a fortnight.
Per fortnight |
Current - Single |
Current - Couple combined | 20 March 2023 Single | 20 March 2023 Couple combined |
Maximum basic rate |
$1002.50 |
$1511.40 |
$1020.60 | $1538.60 |
Maximum Pension supplement |
$80.10 |
$120.80 |
$81.60 |
$123.00 |
Energy Supplement |
$14.10 |
$21.20 |
$14.10 |
$21.20 |
Total |
$1096.70 | $1653.40 | $1116.30 |
$1682.80 |
What are the Age Pension qualification rules?
To receive an Age Pension you must satisfy three main requirements:- Be aged 67 or older
- Be an Australian resident
- You must pass the means test
- If you’re single
- If you’re a member of a couple and at least one of you get a pension
- If you’re a member of a couple and neither of you get a pension
Income thresholds
Here are the income thresholds for a full Age Pension. Single personIncome per fortnight | Amount pension will reduce by |
---|---|
Up to $204 (free area) |
$0 |
Over $204 |
50 cents for each dollar over $204 |
Combined income per fortnight | Amount each member of the couple’s pension will reduce by |
---|---|
Up to $360 (free area) |
$0 |
Over $360 |
25 cents for each dollar over $360 |
Pension Disqualifying Income Limits
Family Situation - Resident |
Previous Amount |
20 Mar 2024 |
Increase |
|
Single |
$2,397.40 |
$2,436.60 |
$39.20 |
pf |
Couple (combined) |
$3,666.80 |
$3,725.60 |
$58.80 |
pf |
Illness-separated (couple combined) |
$4,746.80 |
$4,825.20 |
$78.40 |
pf |
Assets thresholds
Similarly with the asset thresholds, the following are those applied for a full Age Pension. Assets are generally financial in nature (bank accounts, shareholdings, investment property). An important exemption is the family home. You can live in a $5 million home and if your income and assets are below the thresholds, you will still qualify for an Age Pension. Limits for a full Age Pension are:
Your situation |
Homeowner |
Non-homeowner |
---|---|---|
Single |
$301,750 |
$543,750 |
A couple, combined |
$451,500 |
$693,500 |
A couple, separated due to illness, combined |
$451,500 |
$693,500 |
A couple, one partner eligible, combined |
$451,500 |
$693,500 |
Pension Disqualifying Assets Limits
Family Situation - Resident |
Previous Amount | 20 Mar 2024 | Increase |
Single, homeowner |
$667,500 |
$674,000 |
$6,500 |
Single, non-homeowner |
$909,500 |
$916,000 |
$6,500 |
Couple (combined), homeowner |
$1,003,000 |
$1,012,500 |
$9,500 |
Couple (combined), non-homeowner |
$1,245,000 | $1,254,500 |
$9,500 |
Commonwealth Rental Assistance (CRA)
This assistance is provided to those Age Pensioners who are renting. CRA is also increasing as on 20 March 2024 as per the following table:Maximum Payment | ||||
Family Situation |
Previous Amount |
20 Mar 2024 |
Increase | |
Single |
$184.80 |
$188.20 |
$3.40 |
pf |
Single, sharer |
$123.20 |
$125.47 |
$2.27 |
pf |
Couple |
$174.00 |
$177.20 |
$3.20 |
pf |
Rent Threshold | ||||
Family Situation |
Previous Amount |
20 Mar 2024 |
Increase |
|
Single |
$143.40 |
$146.00 |
$2.60 |
pf |
Single, sharer |
$143.40 |
$146.00 |
$2.60 |
pf |
Couple |
$232.40 |
$236.60 |
$4.20 |
pf |
Rent Ceiling | ||||
Family Situation |
Previous Amount |
20 Mar 2024 |
Increase |
|
Single |
$389.80 |
$396.94 |
$7.14 |
pf |
Single, sharer |
$307.67 |
$313.29 |
$5.62 |
pf |
Couple |
$464.40 |
$472.87 |
$8.47 |
pf |
Pension Concession Cards
These valuable concession cards are automatically issued to everyone who qualifies for the Age Pension. They can save you up to $3,000 per year in medical benefits, pharmaceutical discounts, cheaper travel and transport and some energy bill savings. Depending upon the state in which you reside, further benefits may apply.Work Bonus Credit
Those Age Pensioners who have qualified will also benefit from an $11,800 work bonus credit, which is applied before extra work income is assessed for their ongoing pension payments.How does an Age Pension affect your retirement funding?
Most Australians entering retirement will now have at least modest savings in superannuation. At preservation age (usually 60) these savings can be accessed to help Australians fund their retirements. But as noted above, nearly 70% will qualify for at least a part Age Pension from day one of retirement, so the superannuation they can access will often be used for special projects (renovation, new (non-work) vehicles, medical needs or mortgage reduction). Consequently, the Age Pension can be viewed as the ‘work horse’ of retirement funding for the great majority.How do you apply for an Age Pension?
Applications can be made up to 13 weeks before you reach Age Pension age. They are made through Centrelink, the agency which manages Services Australia entitlements and payments. You can apply online (via a myGov/Centrelink account), by mail (filling in the 18-page application and posting it) or at a dedicated Centrelink services centre.Are there any shortcuts to dealing with Centrelink?
This is a tricky question as Centrelink application and phone call wait times have become legendary. You can pay an agent to process your application on your behalf, and many people find these services much less stressful than doing this themselves. If you wish to handle this yourself, it’s wise to ensure your documents are all as requested, as any delays due to incorrect documentation means your application goes back to square one. If you do ultimately succeed in gaining an Age Pension, it is paid from date of application, so ensuring that your paperwork is correct from the start is the smartest strategy.Is the Age Pension enough to live on?
This is another difficult question to answer, as it depends upon your lifestyle and current spending habits as well as any urgent needs. With singles on a full Age Pension now receiving $29,023 per annum and couples (combined) receiving $43,752, it is clear that tight budgeting will be the order of the day. If you own your own home, you may find the expenditure juggle much easier than those exposed to the rental market.Learn how you could access the wealth in your home
Accessing some of the wealth in your home may help you bridge the gap between a frugal retirement and one with greater certainty and choice. Why not check whether your home equity could enhance your retirement journey? Or download the Improve Retirement Planning eGuide to see if there are better ways to make your retirement funding go further.Download Our Free Home Equity Guide
Download Our Free Improve Your Retirement Funding Guide
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