A Tale of Two Retirements

John and Jane Jones have worked hard their whole lives, paid their taxes and, now they have retired, they feel they are entitled to a full age pension.

Henry and Hannah Evans have also worked hard and paid their taxes. However, worried that Australia’s aging population and expanding pension bill will make it ever more difficult to qualify for an age pension, they have sought to be as financially independent in retirement as possible. With meticulous savings and smart use of superannuation they have built a significant nest egg.

While both couples have equally legitimate views, in one respect  Henry and Hannah have already been proven correct with changes to the assets test from 1 January 2017 reducing the number of people qualifying for a part pension and some losing it altogether.

What matters most?

This leaves prospective pensioners asking themselves: what matters most? Scraping back the tax paid over the course of their working lives, or living the most secure and relaxed lifestyle they can?

Several strategies can help boost the amount of age pension you receive, but these normally involve reducing the level of financial assets assessed by Centrelink, which can negate pensioners both the income those assets could generate and any capital withdrawals.

The Jones might, for example spend a large amount on home improvements, give money away to their family within allowable limits, and take an expensive holiday overseas. Once back home they might then qualify for a full age pension of $36,582 per annum [1]. That’s close to the amount ($40,054 pa [2]) that the Association of Superannuation Funds of Australia (ASFA) calculates is sufficient for a “modest retirement” for a 65-year-old couple. That is, “only able to afford fairly basic activities.”

Things aren’t quite as gloomy as that. The income test allows John and Jane to earn a combined $8,008 per year [3] and still receive a full pension, but that total of $44,590 pa leaves them quite a way short of being able to afford a “comfortable” lifestyle. ASFA defines this as one that “enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.” For a 65-year-old couple, this is estimated to cost $61,522 pa.

The self-funded alternative

The “comfortable” lifestyle is more the sort of existence the Evans have in mind, even if it means not qualifying for any age pension. Freed from the need to watch every dollar and to report any changes in their circumstances to Centrelink, an inheritance, for example, they are also insulated from the impacts of any future changes to the age pension.

Start early and plan well

Unfortunately, many people retiring today don’t have a choice and, dependent on the age pension, they will be denied that comfortable retirement. The key is to start retirement planning as early as possible. Pensions and superannuation are complex areas, so it is essential to obtain detailed and personalised advice from a qualified financial adviser. Take control of your future now and contact Sicacca’s today to find out how you can achieve a comfortable retirement.


Remember, it’s never too late – or early – to start at Sciacca’s we can help you to plan for your future and boost your retirement savings. Call John Sciacca today for a no-obligation consultation on 07 3357 5553 or email john@sciaccagroup.com.au

[1] As at September 2019.
[2] As at June 2019.
[3] As calculated under deeming rules. The actual cash amount may differ.