The Age Pension is an extra fortnightly payment from the government to help you fund your living expenses in retirement.
It’s one of Australia’s most important safety nets which ensures Australians have a minimum income in retirement if their superannuation isn’t enough.
The problem is, with rising inflation and the cost of food, petrol and mortgage repayments climbing higher and higher, sometimes the Age Pension falls short of retiree’s needs. This means additional income is required to meet living costs.
However, there’s also a limit to how much income you can bring in retirement to quality for the pension.
Here’s everything you need to know.
What’s the retirement income test for the age pension
Age Pension rates vary wildly for singles and couples, and depend on your assets and any additional income.Â
As of the 20th of March this year, the Age Pension is a maximum of $1,100.30 per fortnight for singles and up to $829.40 per person for couples. This doesn’t include any additional potential supplement rates.
But the Age Pension is subject to both an income test and an asset test. Unfortunately, Australians in retirement are paid under whatever test that produces the lowest rate of payment.
The income test assesses all of your income pooled from all sources. That includes anything from superannuation contributions, investment income, part-time wages, bonuses or commission payments. It’s applicable regardless of your age.
So how much can I earn?
As of last month, in order to receive the full Age Pension, singles can’t earn more than $218 per fortnight, and couples can’t earn more than $380 per fortnight.
But it’s still possible to receive a part pension if you earn over those thresholds.
Singles can earn up to $2,619.80 per fortnight and couples (living together) can earn up to $4,000.80 per fortnight and still qualify for at least a part-pension. Couples living apart due to ill health can earn a little more, at up to $5,183.60.
But it’s important to note that earning up to these thresholds will reduce your Age Pension payment. For a single person, your Age Pension will reduce by 50 cents for each dollar over $218 and for couples it will reduce by 25 cents for each dollar over $380.
How much will retirement actually cost me?
According to ASFA, a comfortable retirement is expected to cost approximately $54,840 per year for individuals and $77,375 per year for couples.
That translates to approximately $2,109 per fortnight for singles and around $2,975 per fortnight for couples.
The post How much can I earn in retirement and still qualify for the Age Pension? appeared first on The Motley Fool Australia.
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