Supporting retirees is a pressing issue for an aging population in Australia. Government studies are predicting a rapid increase from 2.5 million Australians aged 65 years and over in 2002, to 6.2 million in 2042. This makes retirement planning even more crucial for the everyday Australian, no matter what stage in life you are in. Fortunately in Australia, the government has schemes in place to support these changes in a person’s life, which includes the Age Pension.
The Age Pension can provide income support and concession access for eligible individuals. The Australian Department of Human Services will send fortnightly payments to the approved individual for the rest of their life, or will cease if the individual is no longer eligible. To be eligible for the Age Pension, there are a number of criteria you must meet at the time from the time of your claim.
- Residence requirements
You will need to be physically present in Australia to receive payments, and an Australian resident for a continuous period of 10 years. Alternatively you could be a resident for number of periods that sum up to 10 years, with one period lasting at least 5 years. There are exemptions to this rule such as for those who have or had refugee status, and other recipients of particular allowances or pensions.
- Age requirements
Currently, the qualifying Age Pension is 65 years of age or older. However, this minimum age will now be increased over the years. Specifically, the qualifying age will increase by 6 months every 2 years, starting on 1 July 2017 until 1 July 2023. It means that by 1 July 2023, the qualifying age will have reached a minimum of 67 years old. This will impact the payment amounts you can expect to receive as part of the Age Pension income support. Keep reading on for more details
- Income test
The amount of payments you can receive will depend on other government support payments you are receiving as well as your family situation.
- Assets test
Particular assets you own will affect the payment amounts you will be eligible for with the Age Pension. These include real estate assets that is not your principal home, granny flat arrangements, retirement village contributions, life interests, financial investments and more. These payment reductions or increases are tapered according to the number of years you are aged above the minimum requirement for the Age Pension.
Therefore, the changing age requirements should be a key factor to your retirement planning if you plan to make a claim for the Age Pension. There are of course plenty of other investment options for your retirement plans that may help provide the exact income that will support you desired lifestyle – just seek out your local retirement planning strategist and advisor for more information.