Today is a very special video addition. It is my video number 100.
I cannot believe how quickly the time has gone.
I've started this channel first as a form of communication and support for my own clients and my local community,
but then slowly questions started coming with more and more people watching, and now it has become an Australia-wide channel,
which is really amazing outcome, one that I have never expected, but for which I'm so very grateful and appreciative.
So considering that today is a very special video, I also wanted to make it a very special topic,
topic that is the most important for almost every pensioner and every retiree or a person preparing for retirement.
What is the real value of Age Pension in Australia?
Age Pension in Australia is different than in most other countries.
Our system is a means-tested based unlike other countries, where it works more like a defined benefit,
and your eligibility is based on length of your employment and income earned during your working years.
There is no point arguing which system is better, as one can prove that either of those systems can work,
all I can say is that in Australia, unlike other countries, you can pre-plan and optimise money
to maximise safety of government benefits as well as enjoying having a choice of how your own personal assets
are to be invested and what income you wish to derive from your own money.
So why do I concentrate on Age Pension so much? Why do I keep talking about it?
Why do I, as a financial planner, keep trying to explain to everyone that if there is a way to restructure your savings
and your financial assets for you to have access to part Age Pension, you should at least inquire and explore this avenue? Why?
Well, this answer might surprise you.
My name is Katherine Isbrandt of About Retirement, I am Certified Financial Planner
and you are watching About Retirement TV,
the only place that will provide you with all the information that you need to be better financially prepared
for your upcoming retirement, or to improve it, if you have already retired.
As I always say, Retirement is a Journey, not a Destination, so be well prepared for the Ride.
And now, let’s answer these questions, why do I talk about Age Pension so much?
Why do I try to get as much as possible for my clients? Why maximising Age Pension is so important?
What is the real value of Age Pension in Australia?
It is not based on any other factor, but a simple mathematical formula and my goal for each of my client:
to increase income security for the rest of my clients’ lives.
Before we start answering those questions, you need to remember the following:
every $10,000 of your assets above the allowable limit of Asset Test threshold, reduces your Age Pension by $780 per anum.
So if we reverse this, we could say that every $10,000 spent on your lifestyle, or on one of the tips I provided in my most popular video
“9 ways to legally hide money from Centrelink Age Pension”,
will improve your Age Pension by $780 per anum.
So logically you might say that every $100,000 of assets equals to $7,800 of annual income.
Can you please tell me, where can you find an investment that will provide you with a guaranteed, secure,
and payable for life-income at the rate of return of 7.8% that also increases with CPI, which is Consumer Price Index, annually?
Well, after working for over 20 years in financial planning, I have not come across such an investment yet.
So to put this bluntly,
If you are a single pensioner eligible for the full Age Pension at today's rate of $987.60, therefore annual income of $25,677
In order for you to derive this income from your own sources you would need to have $329,200 of your own funds,
and that's providing that you can find an investment with a guaranteed rate of return of 7.8% anum for life
and subject to annual income increases based on the level of inflation.
Because this is a pretty unrealistic expectation, let’s look at the rate that might be available on the market of say 4%.
you would need to have approximately $640,000.
For a couple, your combined annual Age Pension amounts to $38,708.80
If you were able to derive a guaranteed income of 7.8% (which you cannot), you would still need a lump sum of $496,266.
If we get a little bit more realistic and calculate it based on 4% income return, you would need a lumpsum of $967,000.
So for a single pensioner your full Age Pension is equal to you having a lump sum of $640,000
invested to pay you your annual income of $25,677 for life.
For a couple, your full Age Pension equals to you having a lump sum of $967,000
to pay you the full Age Pension payment of $38,708 for life.
Can you see now the value of your Age Pension?
Can you understand why I am trying to maximise it for every single retiree or pensioner I work with?
And I haven't even mentioned any additional benefits such as a Pensioner HealthCare Card.
If you don't know what those benefits are, watch my video: "Pensioner Concession Card - the best"
I purposely keep this video short, to make sure that this message comes across to you as clear as possible
and is not mixed with any other information.
I really want you to fully understand and appreciate Age Pension in Australia.
This is an incredible benefit for you if you can get even a small part of it.
So organise your money wisely, research every possible scenario, speak to professionals that work in this environment
on daily basis, to take advantage of every single benefit that could be available to you.
If you have any questions or comments, please leave them below my video. I do try to reply to all the comments within 48 hours.
If on the other hand you would like to speak with me personally please visit my website AboutRetirement.com.au
and book the 15 minutes chat.
If you enjoyed this video, please LIKE it and SUBSCRIBE to this channel not to miss my next video.
And after you’ve done it, again I repeat, visit my website AboutRetirement.com.au where you will find heaps of extra information,
all devoted to the topic of preparation for retirement or optimising your existing retirement financial set up.
And while you are there don't forget to sign up to my Newsletter,
that will keep you up to date with all the issues that can impact your retirement.
And now please jump to the next video,
and today I will recommend the video mentioned before:
"Pensioner Concession Card - the best"
And the second recommendation is a current
and important issue discussed in my recent video:
“Changes for retirees under the new Labor government”
Enjoy and I will speak with you very soon, bye.