Author Topic: There is no pension for FIRE people, right ? Australia.  (Read 2034 times)

life_travel

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There is no pension for FIRE people, right ? Australia.
« on: March 08, 2017, 09:09:53 PM »
Question for fellow Aussie mustachians. While I wont be getting pension ever as I didn't live in my birth country long enough to get much , and then I lived for 20 years in others where I don't qualify ... So for our calculations I don't include pension at all . I'm seeing that people from US mention social security that they will be getting in addition to their stache. Is it the same as AU age pension ?
The reason I ask is that my husband would qualify however.. And here is the actual question . When I looked up age pension it is only for people with assets less than 240K or 270K , we will have more . So do I understand correctly that any AU mustachians won't get any pensions due to their savings being over the threshold ?

Nudelkopf

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Re: There is no pension for FIRE people, right ? Australia.
« Reply #1 on: March 08, 2017, 11:05:55 PM »
Correct. The bane of all moutachians who bother to save/invest for their own retirement.

My parents are in this position as self-funded retirees  (Mum retired recently at 55). They don't qualify for a health care card or any pension (despite my disabled father). And there's so much that goes along with that. Although they have significant assets ($3M?), they're still very stressed about paying for their aged care. Meanwhile, if they hadn't saved & were on the pension, they wouldn't have to worry about paying for medicine, in-home care, etc.

life_travel

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Re: There is no pension for FIRE people, right ? Australia.
« Reply #2 on: March 09, 2017, 01:17:02 AM »
That's what I thought , it's a pity , especially as we are aiming for a very modest 700k.

marty998

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Re: There is no pension for FIRE people, right ? Australia.
« Reply #3 on: March 09, 2017, 03:59:48 AM »
The full pension cuts out when your assets are around ~300k

You can still qualify for a part pension with $700k and a paid-off home. It tapers depending on income and assets tests. The question is why would you want to live so close to the bone given the scope and opportunity you have to do so much better?

Nudel - the quality of age care that your parents will be able to afford is far in excess of what they would get if they were on the age pension and had no choice. They needn't worry.




life_travel

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Re: There is no pension for FIRE people, right ? Australia.
« Reply #4 on: March 11, 2017, 05:41:50 AM »
The full pension cuts out when your assets are around ~300k

You can still qualify for a part pension with $700k and a paid-off home. It tapers depending on income and assets tests. The question is why would you want to live so close to the bone given the scope and opportunity you have to do so much better?

While we are not big spenders , some business decisions in 2007-2008 and the GFC affected us in a huge way so we are WAY behind where we could be .. And we are in our 40s already , so saving bigger amount would be amazing but would make us work full time for quite a number of years ... I don't want that .. So it's a trade off :) hopefully we will be able to earn ~some~ extra money which I don't count on. No chance of inheritances :) and no pension then . Oh well, I'm sure we'll be fine . I'm an optimist !

itchyfeet

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Re: There is no pension for FIRE people, right ? Australia.
« Reply #5 on: March 11, 2017, 06:25:18 AM »
Correct. The bane of all moutachians who bother to save/invest for their own retirement.

My parents are in this position as self-funded retirees  (Mum retired recently at 55). They don't qualify for a health care card or any pension (despite my disabled father). And there's so much that goes along with that. Although they have significant assets ($3M?), they're still very stressed about paying for their aged care. Meanwhile, if they hadn't saved & were on the pension, they wouldn't have to worry about paying for medicine, in-home care, etc.

If they are stressed about having too much money for a pension they could just spend all their money and then they wouldn't have to worry about paying for medicine.

 I never understand the "haves" getting all green eyed over the "have nots".

In any case if they are old enough to get the pension ie: >65, then they could probably have a withdrawal rate of at least 6% of their $3 million and be spending $180,000 a year. This should provide a pretty, comfortable, financially stress free life. They are extremely fortunate to be in the wealthy minority.

life_travel

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Re: There is no pension for FIRE people, right ? Australia.
« Reply #6 on: March 11, 2017, 02:25:04 PM »
Agree. Not sure why they will be stressing being millionaires?? In regards to my original queiry, I was just making sure that I project our income correctly , without pension , as I constantly see that US moustachians add it in .

alsoknownasDean

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Re: There is no pension for FIRE people, right ? Australia.
« Reply #7 on: March 11, 2017, 05:17:34 PM »
That and the goalposts will probably continue to shift, especially as more of the population is 65+.

Sure, some old folk might be happy to game the system to continue getting the pension, but not having to deal with Centrelink in your old age sounds pretty good.
« Last Edit: March 11, 2017, 05:21:06 PM by alsoknownasDean »

life_travel

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Re: There is no pension for FIRE people, right ? Australia.
« Reply #8 on: March 11, 2017, 10:16:42 PM »
That and the goalposts will probably continue to shift, especially as more of the population is 65+.

Sure, some old folk might be happy to game the system to continue getting the pension, but not having to deal with Centrelink in your old age sounds pretty good.
True, didn't have to deal with them yet and never claimed anything , other that what usually can be claimed on tax return and would rather rely on my own money.

Fresh Bread

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Re: There is no pension for FIRE people, right ? Australia.
« Reply #9 on: March 12, 2017, 05:31:36 AM »
Regarding the aged care costs - I have been researching it this weekend since one of us will likely go into a home fairly early based on family health history.

Residential aged care requires an accommodation bond ($200k-1.1m depending on location and quality) plus a daily payment plus a means tested daily payment. My quick calc showed the daily costs will take about half of our retirement income (which will be about ~61k) and the person left behind in the family home will experience a drop in living standards (as a lot of fixed costs won't drop, the big one is council rates in our HCOL). There is a cap on the means tested payment but I think you'd have to have an income in excess of 85k, I can't remember exactly.

So according to my calcs, the person 'left behind' would be living on $32k compared to $21k on the full pension, still a better living standard but a large drop at an already stressful time. Worth being aware of if you are in the middle ground of not vast wealth but too much for means tested benefits. There are probably some ways to work it if you had a good financial planner..! For us I think it means handing over the bulk of the stache to pay the accommodation bond because at least that is returnable.

stashgrower

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Re: There is no pension for FIRE people, right ? Australia.
« Reply #10 on: March 12, 2017, 07:24:07 AM »
Nudelkopf, have they looked into the low income health care card?