How to strengthen your finances in retirement

If your assets or income have gone down due to extra drawdowns to pay for higher household costs, or some of your investment assets have not performed as well you hoped, you may now be able to sneak in under the assets and income test limits and score a small part pension.

For those still ineligible for even a part Age Pension payment, research exactly where you fall foul of the assets and income test requirements so you’re ready to reapply if your situation changes in the future.

4. Apply early for the Age Pension

With the media full of stories about long delays in Centrelink’s processing of claims for the Age Pension, it’s a good idea to start the process as early as you can so your application is not at the bottom of the queue when you actually retire.

For retirees who turn 67 this year, circle the date on your calendar that’s three months before your birthday. From 1 July 2023, you become eligible for the Age Pension when you reach age 67, but you can submit your application to receive the Age Pension up to 13 weeks prior to reaching the qualifying age.

When you apply, you’ll need to confirm your identity and supply lots of supporting information and documents (such as your Tax File Number and your bank account and income and asset details) with your application. So get ready early to give yourself time to address any potential issues Services Australia may raise and to ensure you receive your first fortnightly payment as soon as your eligibility date rolls around.

The easiest way to apply for the Age Pension is through your myGov account linked to Services Australia, so ensure you also have that all set up well ahead of time.

Scoring even a small part Age Pension can be a valuable boost to your retirement income. You also receive the Pensioner Concession Card, which entitles you to cheaper healthcare and medicines.

5. Review your Centrelink asset values

If you qualify for a part Age Pension, update the information Centrelink holds about your assets with realistic, current valuations. This includes both your financial assets and the physical ones like your car, caravan or household contents, most of which will have gone down in value as they’re a year older. Ensure your valuations are realistic, as you may be surprised how little you would receive in the secondhand market for these types of assets.

Under the Age Pension asset test taper rate rules, every $1,000 reduction in the value of your assets could mean you receive an extra $78 per year  in pension payments.

If the total value of your assets has reduced – due to asset depreciation or even spending on a holiday or home renovation – you could be eligible for a bigger fortnightly pension payment. So, contact Centrelink and update your personal information.

6. Check your eligibility for the Commonwealth Seniors Health Card (CSHC)

If you’re not eligible for any Age Pension payments, you may still qualify for the Commonwealth Seniors Health Card (CSHC), so make sure you apply for this card as soon as you turn 67 (the Age Pension eligibility age).

The CSHC is a concession card giving you access to bulk-billed doctor visits (this is up to your doctor), cheaper Pharmaceutical Benefits Scheme (PBS) medications, a larger Medicare refund for out-of-hospital costs and, potentially, cheaper government services. Some estimates suggest the CSHC can save you more than $2,500 a year on your healthcare costs.

A CSHC is only valid for one year. If you have been ineligible in the past but your income is lower this year, you may find you are now eligible as the income test for the CSHC is reviewed every year on 20 September.

7. Check you are receiving all your government entitlements

For retirees receiving a full or part Age Pension, ensure you’re getting all the government benefits you are entitled to receive.

A Pensioner Concession Card is the key to getting cheaper vehicle registration; rent assistance; rebates on your electricity, water and gas bills; help with energy costs if you need essential medical equipment; cheaper local council rates and even less expensive spectacles. It’s also the key to eligibility for any one-off special cash payments the federal government decides to make.

State governments also provide concession cardholders with benefits. In Western Australia for example, eligible pensioners enjoy a 25% rebate on their local government and water rates and half-price renewal fees on your driver’s licence. Queensland offers annual electricity and gas rebates, plus discounted motor vehicle and boat registration fees.

Most state governments offer a wide – and regularly changing – list of benefits to concession cardholders, so click on the link for your state to find out more:

• ACT Government Savings Finder
• Northern Territory Government concessions
• NSW Government concessions and rebates
• Queensland Government concessions and rebates
• South Australian Government concessions
• Tasmanian Government discounts and concessions
• Victorian Government concessions and benefits

8. Apply for your state Seniors Card

Everyone who is aged 60 and over should apply for their state government’s Seniors Card. These cards give you access to valuable concessions on transport costs and discounts from participating businesses for a wide range of goods and services, which can help stretch your retirement dollars further.

State Seniors Cards are not means tested, so every retiree should have one, as they provide generous public transport and government concessions, plus discounts for holidays, travel, automotive services, household needs and professional services. You may even qualify for a state Seniors Card if you are still working a few hours each week, so check the eligibility rules for your state.

9. Register for the Medicare Safety Net

Whether you are single or part of a couple, ensure you’re registered for the Medicare Safety Net to help lower your medical costs for out-of-hospital medical services like seeing a doctor or specialist, and for tests like CT scans and blood tests. Once you spend over a certain amount in a calendar year, you receive a higher amount back from Medicare.

If you register as a family or couple for the Medicare Safety Net, Services Australia automatically keeps a tally of the out-of-pocket and gap amounts for your healthcare expenses. This ensures your costs will be combined and you could reach the threshold for higher payments more quickly.

Seniors holding a Pensioner Concession Card or CSHC can access the Extended Medicare Safety Net for Concessional and Family Tax Benefit Part A recipients. For more information, see the Services Australia’s website here.

10. Take on some part-time work

Deciding to retire no longer means you never want to work again. Many people take some time off before deciding to return to the workforce in a different way – or even in a different industry.

Although full-time work is an option, most retirees find part-time or casual work – or even consulting or project work – a more palatable option if they want more retirement income.

With extra money coming in, there is less reliance on your existing savings to pay for everything, which can stretch your super a little further. Working even a day a week opens up new options for managing and growing your super later in life.

11. Downsize your house

For most Aussies, their home is one of their biggest assets and the equity they have built up in it can be a valuable source of additional income.

One option is to downsize by selling your home and moving to a cheaper property. In some cases, moving to a smaller or less expensive home can free up considerable capital for generating a new source of retirement income.

Before deciding to downsize, don’t forget to check how much you are likely to end up with, as there are transaction fees and taxes to pay whenever you buy and sell property.

Selling your home could also allow you to make a downsizer contribution of up to $300,000 ($600,000 for a couple) into your super account. There is no upper age limit for downsizer contributions; if you qualify, this could be a good way to get more money into the tax-efficient super system.

If downsizing doesn’t appeal, you still have options. You could rent out a room or take out a reverse mortgage.

12. Consider the Home Equity Access Scheme or a reverse mortgage

Reverse mortgages are financial products offered by banks or other financial lenders and work like regular mortgages, but in reverse.

Instead of making payments, you receive either a lump sum or regular payments from the lender. Repayments are not required until you sell or pass away.

The Home Equity Access Scheme (HEAS) is a reverse mortgage offered by the federal government. It can provide a useful tax-free boost to your retirement income with payments available to both eligible pensioners and self-funded retirees.

The HEAS provides non-taxable fortnightly payments (or a lump sum) from Services Australia or the Department of Veterans’ Affairs (DVA) secured by a loan against your home. The HEAS has a very low interest rate compared with a commercial reverse mortgage, but the maximum payment available may also be lower.

13. Review your health insurance cover

Many people forget to regularly review their private health insurance cover as they age. Health insurers are constantly tweaking their policies and launching new ones, so ensure there isn’t a cheaper, more suitable policy available from your current health insurer.

Health funds often offer more cost-effective policies to older members by cutting out benefits for things like pregnancy, birth and IVF services, so check whether there is a policy better suited to your personal circumstances.

It may also be worth considering whether it’s cost effective to retain cover for extras such as dental or physiotherapy services. This could be one way to reduce your annual health insurance premium while still retaining high-level hospital cover.

Reviewing the current excess on your health policy can also be a good move, as simply increasing the excess you pay if do make a claim can reduce your annual premium and make it easier to retain your insurance cover. Once you’ve reviewed your existing policy, compare it with a few health insurance products from other providers to see if there is better value on offer elsewhere.

A quick and easy way to compare the private health insurance products currently available is to use the government’s online health insurance comparison tool. It allows you to compare policies based on who is covered, where you live and the type of cover you want. You can also select specific hospital services and treatments to provide a more tailored result.

14. Consider a smaller inheritance

Many retirees are keen to leave a financial legacy for their children, grandchildren or other family members. Some want to leave something for their favourite charity.

Although this is understandable, when you’re worried about whether your retirement savings will last the distance, reducing the amount you plan to leave your beneficiaries could be a simple way to stretch your dollars.

Many children would prefer their parents enjoy their retirement years rather than going without to leave a substantial amount behind for their beneficiaries.

While leaving less in your estate may be a tough decision, it can be a simple way to ensure your retirement savings last longer.