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The new Centrelink Assets Test has halved our income! What can we do?

Posted August 31, 2017 by MoneyLink

The new Centrelink Assets Test is a disaster… Our total income has halved. Our income now is much less than what pensioners who have saved nothing get.

What can I do about it?

The new Centrelink Assets Test requires pensioners to earn 7.8% per annum income from their savings just to replace the pension they lose because they have the savings. They lose $3 per fortnight per $1,000 of assets.

So 3 x 26/1,000 = 7.8%. As this is almost impossible it means that people with more savings have less total income, unless they spend their capital. Most don’t want to do that. They might live to 100, and they want to leave assets for their family after they are gone.

So they can only work on earning income as high as possible with reasonable security. Plus retirement pension plans.

So… convert your super to account based pension, and invest in a balanced or growth portfolio. The rules require a regular drawdown based on age:

4% up to age 65
5% to age 75
6% to age 80, etc

A balanced portfolio hopefully will earn 6 – 7% so this may nearly make up for pension losses. However, a conservative portfolio might earn 4 – 5%. And the regular pension payments are a fixed drawdown plan that ensures reliable income for the retirees.

Our advice to retirees is to get professional financial advice to work out the best income generation plan for them based on their personal circumstances.


MoneyLink Financial Planning Pty Ltd is an Australian Financial Services Licence Holder. No:.247360

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