Often overlooked by many, the Age Pension should always be recognised as a critical component of Retirement Income for most senior Australians. However, many people are increasingly challenged trying to understand and receive the Pension. It’s a major pain point for a significant number of Australians, with many not knowing how or where to get help.
Recent research showed that 40% of people over 50 didn’t know whether they’d be eligible for the Age Pension. Yet, it’s the most important source of retirement income for many older Australians. It represents more than half the income in retirement for more than half of older Australians, with 80% of people eligible by age 80. In addition, it showed that 50% of people found the Age Pension difficult to apply for and that 80% of people would have liked help.
The biggest question is, where can people turn to receive this support and assistance when they seek help?
It turns out that an individual’s pain is not just the stress and administrative challenge of applying for the Age Pension… for many there is also financial loss. After over 30 years of helping people apply for the Age Pension, SLC Retirement Services can provide multiple examples about people delaying their Age Pension application and losing tens of thousands of dollars. There is no backpay on a late application.
Approximately only 44% of Age Pensioners said they applied on time…and 32% said they applied more than one year late…and 16% were more than three years late.
Reasons for delay are many. From lack of understanding, to aversion to dealing with Centrelink. Some people think they’re not eligible because they’re still working part time or their partner is still working. Others didn’t know what to do…or couldn’t get past the complexity of means testing and the myriad of forms involved. Some felt guilty about applying.
Whatever the reason, the cost to the individual is potentially staggering. Applying late may be one of the most expensive mistakes commonly made by senior Australians.
A recent example is of an individual who admitted to applying three years late and missing out on $75,000 of benefits. Based on the 56% applying late, it is estimated the leakage totals into the billions annually.
The Age Pension matters because it’s a key part of an individual’s retirement income strategy. By encouraging senior Australians to avoid delays we can help people determine their correct entitlements from Centrelink, which in turn helps them meet their retirement expenses.
But most importantly, by offering help with the Age Pension most people are better off. We realise that by providing assistance to those who require this support at this critical transition time of life is the secret to helping them to live comfortably in retirement.
Our “only in Australia” means testing regime creates all kinds of complexity for forecasting and optimising retirement incomes. It means that retirement planning has to be done on a household basis – since the Age Pension is calculated with your partner included.
The wisdom of so many financial decisions revolves around the impact on the Age Pension. “How should I invest, given a large portion of my retirement income may come from a government guaranteed inflation annuity (age pension)? Should I pay off my mortgage? Should I transfer super monies to my younger partner?” There are ways to improve Age Pension benefits…and ways to reduce them.
People need to be aware of the complexities involved and help is available at SLC Retirement Services. We are able to provide support with the Age Pension to ensure you are at the front of that retirement income queue.
