What Life is Really Like on the Pension

And those who do lose their part pension, like my sister who received $3 per fortnight, although they lose the pension concession card, in its place they receive a Senior health card for life WITHOUT having to meet the income test.

And they failed under the new asset test. They have no income or assets (other than the usual decent car and household furniture) apart from superannuation, which is the asset over the threshold.
Marg

 

I agree. Senior Card and Heath Care Card can be a huge saving.

 

That would mean that they have more than 816k in super if they're homeowners, or more than 1m if they're not. Imo if the recent changes mean people in her position finding themselves no longer eligible for pension then it sounds like it might be a policy that has some success at least

 

Yep.....about 250k will have their pension reduced....and another 90k will lose their pension altogether. One of the reasons is if you want to build your asset based go big or go small...otherwise it will be painful....

 

Be the homeowner and rent out rooms... that's what one of my grandmothers did, her home being located a short distance to UNSW.

Picked a few quiet Chinese female students... all they do is study. Plus my grandmother doesn't speak English so it worked out perfectly.

 

Sadly, it often comes down to families. Many adult children seem to have the mindset that an inheritance is their birthright. They seem to think it ok for mum (usually) to struggle along on a pension but hold on to the family home so they will inherit. In one case in our street a frail and nearly deaf lady in her eighties is alone in a huge house worth close to $1m. Daughter airily ignores the fact that mum should be in some form of assisted living while neighbours do the heavy lifting ensuring mum is ok. Daughter is worried about possibly having to pay a bond, even though the sale of the house would easily cover any costs, and the bulk of the bond is refundable. But daughter has her eye firmly on the house...... (think the removal truck is on speed dial!)

To me, the pension should be a safety net. People should have to spend the bulk of their assets first before turning to the taxpayers to support them.

Not sure though what to do about the hypothetical little old lady sitting in a $20m Point Piper mansion and on the pension. Sure, it is tough to make people move from their home of many years, but it does happen to many. Properties, both houses and family farms, are resumed and owners forced out. Some have to leave a loved family home for health reasons, I.e., stairs become too difficult to manage. Older people in rental accommodation are often forced to move.
Marg

 

I was going to comment the same thing! By now everyone who is no longer eligible for the aged pension should have recieved their commonwealth seniors health care card!

 

It is interesting that the threshold for assets only increases by $200K for non- homeowners. Not many places you can buy a home for $200K.
Lesson is - make sure you own your own home!
Marg

 

No offence taken...this sort of debate is very necessary and essential....

I think the current Coalition...migth have just ****** a large contingent of people who voted for the conservatives...approximately 350k people of voting age.

Add to the number of looming Baby Boomers who see retirement edge out further add another potentially 1m people....this should get interesting at the next election.

 

Not necessarily.
Labor won't say that they will reverse the changes, so they won't.
But, there is always Pauline.......
Marg

 

I don't believe labor will either ..Pauline is an idiot..and would have trouble with the maths. Her policies are stupid and will ruin Australia. If we get rid of immigration of skilled and young people ...we would be in trouble..

As I have posted before...our system is quite generous but means tested. People also have to get used to the fact that at some point they need to look at the their houses as income if they are sitting on more than say $1m...and trade down to a unit.

Eventually it will get even stricter ...if it was not for the skilled and young immigrants in Australia contributing a lot of taxes we would be even in more trouble.

The next stop needs to be middle class welfare..that is outright ridiculous...a very poor policy decision by the Howard govt.

 

The Health Care Card does not include assets. Only income, so if you are living off money from sold assets and have earnings of $671.25 single or $1160 for a couple per week, you can retain the Health Care card. Initially you have to be under $4296 as a single or $7424 for a couple over an initial 8 week period.

As you get older and get more medical issues obtaining discounted prescriptions become very important

 

Yes that is correct...prescriptions can be expensive....they also a 1500 safety net I believe for prescriptions over a year.

 

Sounds like that is the low income health card.
The senior health card is more generous, and for a couple cuts out at an annual income around $82K.
Marg

 

Come on @sanj, you know the difference between gross and nett income. $50k gross can quickly become a lot less once expenses are taken into account.

I can also advise they are structuring their investments around maximising their income, not around retaining a meagre part pension. I was the one who suggested they reapply because they may be eligible for a part pension. No need to call them bludgers. Considering you know nothing about them, your comments seem ignorant and uninformed.

 

The commonwealth seniors health care card is not going to be income tested.

 

Pls keep in mind I'm looking at this purely statistically and would have the same view even if they were my parents.

IMO, if a couple can earn 50k almost tax free in their retirement and find it's not enough, they should be eating into their assets to fund the shortfall, assuming assets outside family home of around 800k to 1m. The pension is not there to support the idea of not needing to liquidate some assets in the event of there being significant assets, IMO regardless of who the person is, their backstory etc, it should be quite clearly a case of no pension.

Understand why you would get defensive, I would too but I genuinely an looking at this as unemotionally as possible which is possibly a more productive way to look at a highly emotive topic imo because otherwise everyone would naturally lean towards what suits people close to them best and no productive policy changes or discussion could ever be made or had then.


This figure would now be tweaked but as of a year or 2 ago nearly 80% of retirees with over $1m in assets outside family home received some sort of pension or govt support. IMO that is ludicrous.

The govt spends something in region of $35k on each household over 65, that's just crazy and in no way sustainable, another household would need to earn over $150k just to "pay their own way"+even out what the average retiree household costs.

When you consider how many million retirees there will be soon and how few households make over 150kyou can see the massive gap that emotions aside, no one has been able to suggest improvements for without significant changes to eligibility.

It's going to reach a point where pensions get cut to all households which will mean under funding the aged who really do need the help just to help the aged who don't want to sell assets. Pension isn't there to help nan and pop give their family and inheritance but in many cases that's effectively what happens.

 

So Sanj...what is your plan?

Mine has to change relying solely on the rental income is precarious at best..so diversifying as we speak...I also want some high dividend shares in the mix now...

 

There's still the medical safety net once you spend $FIIK on farmer-suit-tickles. It only becomes an issue when you can't afford the meds in the first instance.

 

I don't know the answer or the solution, however I do know that SOMETHING needs to change as it is increasingly becoming unmanageable financially for the government and the tax payers. I don't understand people saying that $50k per annum is not enough to live on (after your PPOR is paid off of course).