What a difference a day makes: Reaching Pension age and your take home pay.
Key Points
Reaching your pension age means getting to know a new set of rules.
It is important to reconsider your income against the impact it may be having on your entitlements.
This is part of a broader way of thinking about household income - it’s not just take-home pay
By making the effort to understand the numbers, you are in the best position to make decisions that are right for you.
Your situation is unique, and you should base your decision on a full understanding of the potential outcomes.
Brendan Ryan CFP
0412 181 031
Introduction
Working out the impact of being eligible for the age pension on your household budget can take some serious number crunching if you are still working.
And more and more older Australians are staying in the workforce.
As of April 2021, 19% of men and 11% of women over 65 were still working. And this rate is increasing. In fact - in the last 20 years the rate of workforce participation for older Australians has almost tripled.
To get to the bottom of how your take home pay from your job can impact a bunch of other important parts of your budget, you need to take a closer look at how your income impacts other parts of your budget - like tax and eligibility for entitlements and payments. And this whole story changes once you reach age pension age.
One day, it’s just about your pay - the next day, a bunch of other things come into play - like your savings and the savings of your spouse - whether you own a home, a rental property. Your cars and caravan.
When you turn 67, take a close look at all the new rules and entitlements that apply, and make sure you understand how the system can work for you.
How do you know how much you are actually earning?
Your household income is not just your take home pay.
While the impact of tax might be clear, older Australians reaching pension age have a whole lot of other things to think about.
This is because your household budget is more than just incoming payments. There are taxes, benefits and allowances - which all depend on your unique family situation. And reaching pension age means many of these rules come into play.
Source : Australian Bureau of Statistics
Importantly - income from your job could make a big difference to your bottom line - depending on your situation. Working more hours could mean your household budget is impacted by more than tax - but also a decrease in entitlements that are calculated based on your income.
This whole new world of entitlements and eligibility begins when Australians reach pension age - and this is why it is very important to make sure you understand the rules.
For older Australians, the number of government rules and calculations you need to plow through to understand your income position is mammoth.
And this is just the start of the story of making informed decisions about work and your financial future.
Have you ever considered just how much an extra day’s work will change your financial situation? If this was easy to do, you could make work decisions based on how much you actually benefit from that day’s work.
Changes in your employment income may result in different impact of tax offsets, rental assistance, and eligibility for government discounts and rebates applied to different costs your household may be subject to - like utilities, rates and the cost of a drivers license.
Looking at a change of income based on a day’s work is a really useful start to understanding how your income impacts your household bottom line.
It’s not always as it seems.
Make the right decision for you
To get to the bottom of how your job is helping your household budget takes some serious number crunching and we are here to help.
Brendan
0412 181 031
Not sure what your next move should be?
Why not start with a phone call? I look forward to talking with you soon.
I am always keen to hear people’s stories and find ways to help.
Brendan Ryan CFP
All of my clients have unique situations, but they want the same thing - to get good value and security from the big companies that help them manage their savings, to make sure they get all that they are entitled to from the government, so that they have confidence in their plans.
More than 25 years experience working in finance, together with a deep understanding of retirement and government puts me in a strong position to help you gain confidence that you are doing the right thing, and that you are well organised in your approach.
Call me on 0412 181 031 or send me an email.
Brendan Ryan CFP