Yes, you can earn superannuation income while receiving the age pension in Australia. The key lies in understanding how the income and assets tests work.
There have been some recent changes to the way these tests are conducted as well, so it's important to keep up to date with the latest.
By finding the right balance, retirees can maximise their superannuation benefits and pension entitlements. This could ensure a more comfortable retirement – something we're all in favour of. Let's take a closer look.
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How does superannuation affect pension eligibility?
Superannuation plays a critical role in determining pension eligibility under the Australian Government's assets and income tests.
For homeowners, the assets threshold to receive a full pension is $314,000 for singles and $470,000 for couples, excluding the value of their home.
Non-homeowners have higher limits, at $566,000 for singles and $722,000 for couples.
The income test also applies. Singles can earn up to $212 per fortnight, and couples up to $372 combined while still qualifying for a full pension.
Those earning above these limits may still receive a part pension. But the income cut-off points are set at $2,500.80 per fortnight for singles and $3,822.40 for couples.
What is the 'sweet spot'?
The retirement 'sweet spot' refers to the optimal balance where retirees receive income from their superannuation while maximising their age pension entitlements.
For instance, a couple with $470,000 in super can draw down 4.5% annually (around $18,900) and still qualify for the full pension of $44,855.
This provides a combined annual income of over $63,000, enough for many retirees to enjoy a comfortable lifestyle.
The strategy ensures that people aim to draw income from both super and the government pension, offering more financial security than relying on one source alone.
And managing your superannuation and pension this way could have its advantage.
Experts often suggest strategies to balance assets and income to achieve this 'sweet spot.'
For example, James Gerrard, a financial advisor, says that a couple with $1 million in super might generate $70,000 annually by drawing down 7% on this, according to The Australian.
This might include shares in the S&P/ASX 200 Index (ASX: XJO). But they miss out on any pension payments.
By contrast, a couple with $400,000 in super and some other non-financial assets could receive the full pension and still draw down from their super, potentially enjoying a similar or higher retirement income.
In short
Superannuation and the age pension can complement each other to provide financial stability in retirement.
By understanding the rules and planning strategically, you can maximise your income in retirement. But whether you're relying on superannuation, the pension, or both, it's essential to keep track of changes made to the income and asset tests.
