Last year I put together a retiree checklist and it proved enormously popular.
In 2021 there are some additions. The main changes are around the increase in digital services offered, as well as some lessons from cases of fraud in the later part of the year and an increase in the pension age.
This is a long list and not everything will apply to you but it should help you in organising your retirement. Investing is certainly part of the story but there is a huge amount of information in other areas of vital importance to retirees.
Links have been used extensively for those seeking further details.
Managing your risk
- If you deal with a financial adviser, check their credentials using the ASIC Financial Adviser Register. If they are listed here, they will have a bunch of obligations including being a member of the Australian Financial Complaints Authority. The big fraud story of 2020 involved an unlicensed financial adviser, which means no compulsory insurance and potentially no recourse through the Australian Financial Complaints Authority.
- If you give delegated authority to your adviser to transact on your behalf, make sure you have your own logins to your accounts so you can also see what is going on. The big fraud story of 2020 involved clients relying on fake statements.
- If you manage your own superannuation, it may be a good time to review other ways of managing your savings, understand the difference, and familiarise yourself with the responsibilities of managing your own superannuation. There is a massive amount of responsibility and administration here that may be better organised by a large company that is probably offering better and cheaper service than was available when you first decided to manage your super fund yourself.
Applying for the age pension or Commonwealth Seniors Health Card
- In July 2021, the age pension age will go to 66.5 which is confusing if this is the year you turn 66. If relevant for you, make a diary note to look closely at age pension application 12 weeks before the actual birthday so you can address any hiccups well in advance of your first payment.
- As soon as you receive your Pensioner Concession Card, start applying for your entitlements (see below for the Top 5).
- If you are turning 66 this year, and you are not eligible for the Centrelink age pension, make sure you know why so you can get ready to apply if things change.
- If you are turning 66 this year, and you are not eligible for the age pension, then apply for the Commonwealth Seniors Health Card. This card is income tested and could save you more than $2,500 on healthcare costs. Check again. Low income returns on investments and changes in deeming rates mean that your eligibility may have changed.
Update Centrelink
If you are already receiving a part pension, make sure Centrelink is up-to-date with the right data. For part pensioners, a change in assets of $1,000 could mean an extra $78 per year in age pension payments.
Check the right value for the car or caravan is in the system, and household contents are realistically valued. These assets are means tested so it's worth it. Your savings may have changed due to a holiday, renovation, or medical emergency.
Get MyGov organised
The Government wants you to access departments online. Now is the time to set up online. Here are some of the things you can do via MyGov:
- Easily update income and assets by accessing Centrelink
- Check your Medicare claims and track your safety net threshold by accessing Medicare
- Complete your tax at the press of a button (or two) using MyTax
- Start collecting your health data for easier use via My Health Record
Check on what you are entitled to
- If you receive an age pension, make sure you are receiving these five entitlements:
- Gas rebate
- Electricity rebate
- Water rebate
- Council rate discount
- Drivers license and registration concession
- If you are in NSW and hold a Commonwealth Seniors Health Card, check the Seniors Energy Rebate. You need to re-apply for this each year. (This is not for age pensioners).
- If you are in NSW, hold a Commonwealth Seniors Health Card or get an age pension, and live in a regional area, apply for this year’s $250 Regional Seniors Travel Card after 18 January.
- Travelling by public transport in NSW? If you want to make the most of government transport help, take a look at the following: Pensioner OPAL Card, Pensioner Travel Vouchers, Country Pensioner Excursion Tickets and Regional Excursion Daily (RED) Tickets. Got all that?
- Search for entitlements, concessions, rebates, programmes or whatever they are called. I have more than 40 and counting on my list. Policies change, budgets have announcements - it’s a moving feast. Everything from replacement appliances, fishing licenses, pet registration, and stamps. And from all levels of government and in different departments. We work with our clients to make sure they get all they are entitled to.
- If you are part of a couple, ensure you are registered for the Medicare safety net as a family or couple. With access to Concessional Medicare Safety Net thresholds as a holder of a Pensioner Concession Card or the Commonwealth Seniors Health Card, this one is a no-brainer.
Making and adjusting your plans
- If you are trying to work out whether your savings will last, try the ASIC Moneysmart Retirement Planner. It's better than many of the services provided by for-profit companies as it includes age pension eligibility, and works this out over time.
- Check how your spending compares to the ASFA Retirement Standard. This is a great tool for understanding how your spending in retirement might look if things are going well, and how your spending could look if you have to tighten your belt.
Working and the age pension
- If you are turning 66 or over, do not assume that just because you are working, the Centrelink age pension is not yet available for you. For someone with a small amount of savings, and a low income job, there may be benefits from knowing what is changing (read our blog about this).
Fine-tuning your investing
- If your investments are hard to track, hard to organise, or you cannot link your investment strategy to your retirement plans, it might be time to consolidate and simplify. There is a link between asset allocation strategies and expected returns. ASIC explains it here.
- Australians in later life are more likely to invest at the conservative end of the spectrum using the reliability of returns in a diversified portfolio. Use these expectations, an understanding of spending, and expectations of Government support to be the basis of long-term retirement spending plans. A long-term plan should be easy to hang your hat on with the discipline in regular reviews to make sure the plans still make sense. Allow for medical emergencies, aged care, sudden yearning for travel, urgent house upgrades and maintenance, bailing out a child … the list is endless.
The Pension Loans Scheme
- If you own property and need a top-up for your day-to-day living income, the Pension Loan Scheme may be right for you. The interest rate is 4.5%.
- If you are eligible for the Centrelink age pension at $0, you can apply for the Pension Loans Scheme. Wait a minute? What does this mean? What this means is that you can apply for a loan even if you are a self-funded retiree. This may suit people with illiquid assets that stop them from getting an age pension, who may be cashflow poor. People with income streams that prevent them getting the age pension (via the income test) may also apply for a top up. The Government is keen for you to tap into your property value to support your spending in later life.
What else?
A look back on what happened in 2020 lays out the themes for 2021:
- The Government wants you to go digital. As hard as this may seem to get setup, once you are there you will not want to go back to queues, call waiting and uncertainty. Information is available and easily updated and this should be a key focus in 2021.
- Large companies saying one thing and being something else is a problem, and they can be difficult to contact. Independent advice will help you setup in your best interest.
- Low interest rates, unpredictable markets, long lives, uncertain future expenses ... it's a balancing act. Putting all the elements together takes work but is worth it for the peace of mind.
Brendan Ryan is a financial adviser and Founder of Later Life Advice. This article is for general information purposes only and does not consider the circumstances of any person.