What Life is Really Like on the Pension

That is simply outrageous

 

Yes
That's where half of my salary goes

 

If you are a solo mum then how do you not stay at home when the infant us really young. Seems harsh to me. You mention in the first year? Babies are very dependant at that age. Breastfeeding etc
I'm for solo mums working but i feel there needs to be some period of nursing and bonding etc.
Not all solo mums have family that are willing and capable to help.

 

You've also got to consider that the 15% is levied on all income in super, no threshold applies.

Taking into consideration the threshold, in order to reach a marginal rate of tax of 15%, you would need to earn around 50k in interest (@3%) from an asset base of over $1.67m

So once again, it's a comparison of apples and oranges. (& the new limits don't appear to be as outrageous as the initial responses to the changes proposed by the government but nowhere near as generous either).

 

Yes, thank you @Scott No Mates. Quite correct. That's why I posted that I was not sure the analysis was valid.. turns out it isn't. I have found the information on super tax concessions to be highly partisan, which is why I didn't trust it.

I have mixed feelings about the new asset caps. My parents got caught out by them because Centrelink overvalued their Melbourne IP. We know this because they sold it since it was valued and it came in $40k under the Centrelink valuation. That could mean the difference between a part pension and no pension. The big difference is a pension card vs no pension card. When you are a low income earner that makes a big difference too.

It has been good for my parents though. They were reluctant to sell Melbourne although the market has peaked. They have now sold Melbourne and reinvesting the funds in Adelaide. The $400 pw gross should become $800 to $1000 pw gross in Adelaide. After all the selling costs, tax and buying costs, they will likely be eligible for the part pension again. It would be interesting if they could double their gross income and go from no eligible for a part pension to eligible for a part pension. If so, they will definitely benefit from these changes.

 

As a country, we dont pay all mums to have 12 months off.

Many coupled people also cant afford to take 12 months off.

Its a choice. You can either afford to do it or you can't. Plenty of childcare options available.

 

Do you know what is cut off point to be eligible for part pension? Just curious

 

Not exactly, but it is somewhere around $800k for a couple who own a PPoR. Keep in mind that is all your assets including car etc. It's not much really. One IP in Melbourne plus their car put them over on a gross income of $400 pw. I don't see anyone here aspiring to retire on total assets of $800k with $400 pw gross income.

 

I don't mean to keep repeating myself, but if anything, on reading this entire thread, the euthanasia debate should get reignited...

Oh, and Happy New Year to you all...

 

No offence to you or your parents, but $1,000 pw gross income and expecting a part Pension I struggle to find Centrelink agreeing with this? Please keep us informed.

 

What is the income cap for a couple who own a PPoR?

 

Also I did not say they are expecting a part pension. I speculated they may be eligible for a part pension.

The $1,000 gross is only possible because they are buying the cheapest houses in the worst suburbs of Adelaide. Running costs will average 25%. Nett they will be lucky to clear $39k per annum if there are no repairs and maintenance for the properties that year. I don't see anyone on here aspiring to retire on an income of $39k per annum. Seems very low to me.

 

Found it. For Aged Pension, the income cap is as follows:

Couple combined - $2,936.80 per fortnight.

Income test for pensions - Australian Government Department of Human Services

That's nett, not gross too. So my parents will be around half that. Interesting, isn't it?

They are much more likely to be kicked off the part pension again for reaching the asset cap even though their income will likely be around half the limit. It's interesting to me that personal car is included in the asset cap even though you can't really earn income from it.

Edit: out of interest, I calculated max income limit for a couple on the pension. At $76,356.80 per annum they would no longer be eligible for a part pension. Personally, I think that is quite high. I can't see the correlation between the asset cap and the income limit. They seem out of proportion to me.

 

What car are you talking about? Is it a brand new $80K car or a four year old $20K vehicle. There are cars and there are cars.

Mark and I are in a disappointing position - unless there is an unforeseen miracle, our ips wont give us enough income to live off. We most likely will sell them in a few years because, by the time we get to an age where we may qualify for a pension, it would be far less of a headache to just own one house and live frugally on a pension with a moderate amount of cash backup. It has been a waste of energy trying to become "wealthy" enough to be self-sufficient.

 

But you have tried, whereas many people don't, and I give you credit for that.

 

Exactly the problem with the mentality of so many in this country.

The fact that parents warning 50k a year in passive income, with a PPOR+assets is still planning around the greatest and most prized gift a bludger could hope for shows why it's such a big issue.

 

I don't get a pension. I never will barring catastrophe. So I have no axe to grind.

But in all reality, I find the idea of a couple with a fully paid off PPOR (possibly, though not likely, worth millions), a smidgen under $800K in assets, earning $1400 per week other income (scraping in under both asset and income tests) being able to claim a part pension, however minute, simply unsustainable.

It is the system at fault, not the couple in the above example.

I can see further reductions to both income and asset cut-off levels.

And for the sake of my grandchildren, who are being left the debts resulting from the fact that Australia is racking up debt at an alarming rate, I certainly hope so.
Marg

 

Sanj, I dont think you really understand the difference between a full Centrelink pension and a smidgen of part-pension which includes the Health Care Card and pharmaceutical benefits. If a couple earns $50K a year gross in passive income, they dont qualify for the pension. They will qualify (if they meet the assets test) for a small part-pension and the health care benefit, that is all. It would probably balance out the tax they are charged on their income. In order to receive $50K a year from a Superannuation income stream(paid as a super pension), they would possibly be eating into t\heir capital. As the capital is being used up, the assets get lower and eventually are gone. This hypothetical couple would qualify for a full pension somewhere in their lifetime if they outlive their assets.

Marg is stating the obvious in emotion-neutral vocabulary and I totally agree with her comments. However many of your posts seem to suggest that you consider everyone on a pension of any sort is to be insulted. I will be one of those people some time in the future. Thanks alot.

 

You can choose to be overly sensitive, your last point is incorrect however.

I feel very strongly about people unnecessarily claiming the pension because I think in many cases it is a vital and necessary form of government support and the more people who claim it who could rejig assets and be self sufficient means the less there is for those who truly do deserve it.

So no, I don't feel everyone claiming any pension deserves to be insulted but I do strongly feel that it should be on a needs basis and not a wants/easier/convenient basis

 

So the moral of this sad story....don't wait for the fat lady to start singing before you aspire to get your finances in order.