RETP058.doc
It is a strange phenomenon, and one governments are addressing – why would retirees prefer to live frugally on the age pension just because they think they’ve earned it? This article compares two couples who make different choices for their retirement – age pension entitlement or building superannuation.
Sam and Sally Smith have worked hard all their lives, paid their taxes and, now they have retired, they feel they are entitled to a full age pension.
Jan and Jim Jones have also worked hard and paid their taxes. However, concerned that Australia’s aging population and ballooning pension bill will make it increasingly difficult to qualify for an age pension, they have sought to be as financially independent in retirement as possible. With diligent savings and smart use of superannuation they have built a significant nest egg.
While both couples have equally valid views, in one respect Jan and Jim’s belief was proven correct when changes to the assets test in January 2017 reduced the number of people qualifying for a part pension and some lost it altogether.
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