What Life is Really Like on the Pension

Even then the value of the pension you get is lower than the asset's ability to generate an income (and capital growth).

I have never for the life of me understood the mentality of hiving off assets just to get the pension. It's like shooting yourself in both feet and then being given a pair of sneakers from the taxpayer every fortnight.

 

Yep....thousands...I am a bedouin.....I collect goats.....insallah...they will continue to grow...and the great satan...will meet his demise..

 

Agree. My mum was often told by her friends that they kept their money in a cheque account that paid no interest so they could get more pension. At that time the pension reduced by a small amount for every dollar earned, meaning they were worse off. Of course the banks loved it - all that interest free money!
Marg

 

My comment was meant to be read in the context of pensioners losing their payments. Yes. Other people still need to met income tests.

 

I don't understand it either. My parents inspected a property for sale in Davoren Park. The owner put it on the market because she is now above the pension asset cap. She will take the proceeds and spend them on a round the world holiday. When she gets back she will be eligible for a part pension again. It's ridiculous really

 

I am thinking of helping my parents, who are on the full OAP, out by giving them some money throughout the year. I was reading on DHS's website here Income - Australian Government Department of Human Services that recurring payments from a close family member are considered exempt income for them, which means their OAP payment rate is unaffected.

Does anyone know if there are any limits on how much can be paid to them as regular payments? I want to give about $200 a week.

 

Seek your own advice, but the way i interpret the website you linked was that this was under the Exempt income heading. Therefore the amount is irrelevant since its exempt anyway.

 

If it's a gift it's not income as it is paid at your discretion.

 

Go out to any camping ground outside any city in Australia..
You talk to people people who have sold everything ,then they buy a 250k plus brand-new Motorhome spent everything just to get on the pension and live by payment to payment with a health care card,and most are very happy..

 

It's easy to be happy when you've got zip but your health and a roof over your head (satisfaction of basic needs - Maslow's heirarchy of needs).

This is the only pension-seeking that I'm interested in achieving. If this is what it means to be a pensioner, I can handle that.

 

I have to get into the business of selling motor homes. I can see the advertising jingles now...

"For an extra $50k, you can get the pension!"

 

Have not read all the posts, apologies if this has already been posted. New guidelines for old age pension from 1.1.17

Age Pension - Australian Government Department of Human Services

 

Yeah cut off threshold of 50k (single) & 76.5k (couple).....

I can see why people try to land just below the thresholds so that they get the non-direct benefits of being on the "part" pension.

 

the sweet spot.

When one considers the time it takes to grow resi property portfolio and resi yields not that attractive you can see why people would look at the benefits and what (part pension) can offer. I am not too familiar with the strategy but have heard where some place $300K in super and then have their part pension. Not too difficult to accumulate 300K in super.

if anyone has read sash post on his property portfolio versus income it generates it really puts things in prospective for me..... diversification into different asset classes, trading ie developing etc, is probably a better option to increase cash flow and create income streams

 

It looks like I was being overly ambitious trying to achieve $50k rent before expenses with the very little capital they have.

If they are lucky, they will be getting up to $600 a week rent before expenses. The expenses are: council rates, water and sewer, landlords insurance, building insurance, property management fees, etc. Because the properties are low rent, there is likely to be 3 properties, which means 3x everything. Per property, I have estimated the costs will be around 30% of rent. On a good year, assuming no vacancies and no repairs, they could be getting up $21,840 to live on.

I don't know a single person on this forum who aspires to retire on $20k per year.

IMO that is not much for a year. Any vacancies and any maintenance and that number goes down. This is the problem with cheap rental properties. The gross yield is high - 8% to 10%. But the net yield is below that of decent properties. Of course I have explained all of this to them.

In any case, they fall well under the asset cap and far below the income cap so they will quality for a part pension. I am very glad about this. At the least the part pension is something they can rely on, unlike the rental income which may be non-existent (in the case of vacancies) or used up (in the case of repairs).

 

I overheard my 60 something neighbors discussing things of a financial nature and couldn't help but think if they had simply invested 10% of their income (from the first ever paycheck) via a direct debit to a managed fund utilizing dollar cost averaging they wouldn't have any money worries.

I know they are heading into retirement with a mortgage that a 20 or 30 something should have with not much in the way of super. Its over hearing conversations like this that inspire me to keep the course.

 

Better yet, put that into their super fund each year (so close to 20% pa going into a fund) and they would be quite comfortable - they would quite easily come close to the $1,600,000 'cap'.

 

I agree and if they salary sacrificed that amount (subject to caps) they would get a tax break now for doing it. Super really is a generous savings scheme that could set people up for life if they used it right.