Last week the Federal Government announced its 2015 Budget, with a strong focus on spending rather than saving, the Government aims to stimulate the economy. The ALP plans on using $10 billion to give to families and small business and with interest rates at an all time low, it’s perfect conditions for spending. But what about those of us wanting to save? For retired Australians and those planning on retiring in the near future the budget announcement comes with a number of implications.
At Lady Anne Funerals we know that planning to retire is a process. Considering your assets as well as how much money you might need while organising a budget, beginning a prepaid funeral plan and updating your will can take up a lot of time. With the 2015 budget in mind we have put together some of the most important points that may affect you.
Changes to the age pension eligibility
The main change for retirees under the latest budget is a stricter assets test that will scale down the part pension based on retiree’s assets and wealth. The thresholds are being increased at the lower end and decreased at the higher end, meaning those who have a lot will receive less and those who don’t have a wealth of assets will be able to get a larger pension.
Couples who own their own home should consider the following:
- If you are a couple who own their own home and have assets of less than $451,500 your pension will be increased.
- The current maximum value of assets you can hold and still qualify for a part pension is $1.15m, this amount will be reduced under changes.
- The value of assets you can have in addition to the family home while receiving the full pension will increase to $375,000.
If you are single, the following changes are important for you:
- If the value of your assets not including your own home is less than $250,000 then you are eligible for the full pension.
- According to the Government, if you own your own home with assets less than $289,500 or don’t own your own home with assets less than $537,000 you will be better off.
Gifting (like giving away a car to a family member or paying grandchildren’s school fees) and putting money into a funeral plan will be excluded from assets tests. In the case of funeral planning, individuals are allowed to pre-pay their funeral costs for up to $12,000.
The Seniors’ Supplement
Retirees who hold too many assets to be eligible for the part pension are able to receive a seniors’ supplement of $894.40. Those who qualify have annual incomes under $51,500 as a single or less than $82,400 as a couple. However, in last year’s budget this payment was planned to be removed until it was blocked by the upper house. If passed through the Senate, the Government still plans to remove this payment.
What about my superannuation?
Joe Hockey has announced that there will be no additional taxes on superannuation introduced under this budget. However, with interest rates at a record low, the cash assets you hold in your superannuation accounts are not as profitable as the superannuation you hold in the form of other assets or investments like property. According to Middleton Securities director, David Middleton, “Lots of people with average account balances in super need to think whether they keep all or some of it there.”
Get on top of your retirement planning sooner rather than later to put your mind at ease. Our free retirement planning guide is available for download to help you get through the major points on the list. If you want to discuss funeral plan options please give the ladies at Lady Anne Funerals a call. We can help you with these very important future plans that will ensure your loved ones aren’t financially implicated.