Can you please explain how a holiday house worth $600,000 would be assessed for the age pension? We own our home, have shares worth about $30,000 and have $610,000 in super.
The market value of the holiday home, less any loans outstanding via a mortgage against that home, will be the value used. It’s regularly updated by Centrelink to the current valuation.
Your current assessable assets are about $250,000 above the cut-off point for a couple, which means you would not be eligible for an age pension.
When a couple applies for the age pension, all their assets – such as multiple properties – are assessed.Credit: Simon Letch
My advice is just to spend normally, and if your assets reduce below the cut-off point you could then apply for the age pension. Don’t forget you’re now eligible for the Commonwealth Seniors Health Card.
I have spoken to Centrelink three times regarding the supposed increase in the work bonus, but apparently, there is no increase for me. How does $300 per fortnight suddenly add up to $11,800 in a year as recently reported on A Current Affair and on the Services Australia news page? I am told by one person at Centrelink that there is only an additional $4000 starting balance for new pensioners, not for me as I use my $300 work bonus fortnightly. Just wondering if someone could explain to me how it is actually calculated, who can actually claim more than $300 per fortnight (which it has been for years) and if it will apply to people in my situation in the future?
John Perri of AMP Technical explains that the work bonus of $300 per fortnight has not increased. Instead, the unused amount of that bonus which can be accumulated, also referred to as the ‘work bank’, which previously was a maximum of $7,800, has now increased to $11,800.
In addition, new age pensioners after January 1 will automatically have a work bank of $4,000. This does not apply to you as you have been in receipt of the age pension before January 1.
As you have used up your $300 per fortnight work bonus, I suspect you do not have any amount in your work bank, so this recent change does not assist you at this stage.
I live in a retirement village and my wife has been moved into aged care. Her income has been assessed at $39,000 per annum and her assets have been assessed at $163,000. We have been advised that the fees for the home are a basic daily fee of $60.86 and accommodation contribution $60.55. I think it’s unfair that she is expected to pay almost $45,000 per year on an income of $39,000. Would appreciate your comments.
Aged Care Guru Rachel Lane explains that it is a common misunderstanding that because aged care is means-tested it will be affordable. As a member of a couple your wife will be assessed based on half of your combined assets and income, your home in the retirement village is exempt from the assessment.
People who receive the full age pension and have assets below $58,500 have their accommodation cost met by the government. Once your wife’s share of income exceeds $31,707 a year or her assets exceed $58,500 (or both) she will start paying a contribution towards her cost of accommodation and care.
In your case, your wife is a low means resident, the assets above $58,500 are having an accommodation contribution charged at 17.5 per cent and the income above $31,707 is having accommodation charged at 50 cents per dollar.
Some simple strategies such as gifting within the allowed limits, pre-paying your funeral expenses or purchasing a funeral bond and making sure you are using the second hand value of your personal assets could substantially reduce this cost. Seeking advice about purchasing an income stream with an asset test exemption could also be beneficial.
For example, if your wife’s assessable assets were to reduce by $50,000 the Daily Accommodation Contribution would reduce by $8,750 per year.
We have some spare funds that we would like to put aside for our three grandchildren, aged 5, 3, and 1, to be accessed by them at age 21 or so. Would an index fund be suitable?
Insurance bonds are the perfect investment to build up funds for children and grandchildren because nothing has to be declared on anybody’s tax return each year as the earnings accrue as bonuses.
Furthermore, at any stage the bond can be transferred to the child free of capital gains tax. A good example is Generation Life’s ChildBuilder insurance bond which can be a great way to create wealth for children for a specific purpose.
Noel Whittaker is the co-author of Downsizing Made Simple with fellow finance expert Rachel Lane, available here. Email: noel@noelwhittaker.com.au
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Does having a holiday home mean we can’t get the pension?
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30.01.2024
Can you please explain how a holiday house worth $600,000 would be assessed for the age pension? We own our home, have shares worth about $30,000 and have $610,000 in super.
The market value of the holiday home, less any loans outstanding via a mortgage against that home, will be the value used. It’s regularly updated by Centrelink to the current valuation.
Your current assessable assets are about $250,000 above the cut-off point for a couple, which means you would not be eligible for an age pension.
When a couple applies for the age pension, all their assets – such as multiple properties – are assessed.Credit: Simon Letch
My advice is just to spend normally, and if your assets reduce below the cut-off point you could then apply for the age pension. Don’t forget you’re now eligible for the Commonwealth Seniors Health Card.
I have spoken to Centrelink three times regarding the supposed increase in the work bonus, but apparently, there is no increase for me. How does $300 per fortnight suddenly add up to $11,800 in a year as recently reported on A Current Affair and on the Services Australia news page? I am told by one person at Centrelink that there is only an additional $4000 starting........
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