Can I get a part-pension, and how should I prepare my super for retirement? August 19th, 2022
I retired about 12 months ago, having reached age pension age. At this stage, I have about $170,000 in my super fund. My partner, who is in his early 70s, is over the Centrelink assets test limit and therefore, is funding his own expenses and not receiving an age pension. We share the living costs and I pay my own personal expenses, withdrawing $28,500 yearly from my super. However, my super will only last 6 to 7 years at this rate. That is assuming there are no other “world events” to have a downside effect on my balance.
Can you offer any advice on how to gain a part-pension or alternatives for me regarding my super balance?
Can I get my question answered?
There are a few issues to consider here.
With the brief description you have provided, Centrelink will normally regard you as a couple and therefore, the couple’s means-test will apply. Centrelink routinely treats couples as a “single entity” and hence with a partner, you will be regarded as a “couple”.
Assuming you live in a home owned by one or both of you, if your combined assets are less than $915,500 and your combined Centrelink assessable income is less than $3,316.50 a fortnight, you would both qualify for a part-pension.
If you are renting or otherwise a “non-home-owner”, you are allowed an additional $224,500 in assets.
Note that withdrawals from super or payments from most income stream investments like account-based pensions, do not count towards the income test.
If you are simply together for financial reasons such as sharing living expenses and not in a "relationship" you may be able to be assessed as a single pensioner, living under the same roof as another.
That means you are assessed under your individual financial circumstances not as a couple and from what you have provided, you may qualify for a full age-pension of $987.60 per fortnight. This living arrangement will require independent verification by a non-related third party and you must be able to demonstrate that you operate completely separately from your partner. This arrangement can also occur when married or de-facto couples separate after some time but for financial reasons, cannot physically or financially move-out of the property.
And so to the way you’re drawing out money.
Since you are withdrawing money from super, you should closely consider switching the money from super in “accumulation phase” to super in “retirement phase”. This is typically done using an account-based pension which allows you to draw regular or lump-sum amounts as required.
You can typically do that within your existing fund at little or no cost.
Why? The advantage here is that in retirement phase, there is no tax on the earnings of your super fund. Under your current arrangements, the super fund earnings in “accumulation phase” are being taxed at 15 percent! On a like-for-like investment mix, you’ll end up with a greater rate of return in "retirement phase" because no tax is payable, on the earnings of the underlying investments.
As you are over 60, there is no tax on any money withdrawn from a conventional “taxed” super scheme.