 "Pensions bumped up as living costs climb")
Maeve Bannister
(Australian Associated Press)
More than 4.7 million Australians struggling to cope with cost of living pressures are in line for a helping hand.
An indexation increase on September 20 will be the largest rise for welfare payments in more than 30 years and the biggest for pensions in 12 years, Social Services Minister Amanda Rishworth says.
“This government knows that pensioners and those on social security payments are facing cost of living pressures,” she told parliament on Monday.
“That’s why it’s so important … we give them every little bit of help we can.”
The Age Pension, Disability Support Pension and Carer Payment will all rise $38.90 a fortnight for singles and $58.80 a fortnight for couples.
The maximum rate of pension will increase to $1026.50 a fortnight for singles and $773.80 for each member of a pensioner couple or $1547.60 per couple.
The raise was driven by inflation increases which exceeded the increase in the Pensioner and Beneficiary Living Cost Index.
People on the aged, veterans and disability pensions will also be able to earn extra income without losing their benefits.
In response to growing labour shortages, the government last week announced people eligible for the pension will be able to earn an extra $4000 a year without penalty as an outcome of last week’s jobs and skills summit.
The measure is designed to give people on the pension the option to work if they want and to keep more of their income, Veterans Minister Matt Keogh said.
“We are committed to delivering a package of practical support measures that will improve the welfare and wellbeing of veterans and families building on the services already available,” he told parliament.
Meanwhile, a review of the JobSeeker payment would take place in May next year, Home Affairs Minister Clare O’Neil said.
“Australians are going to be significantly better off as a consequence of this, but there’s a lot more work to do and that’s why we’re here in Canberra,” she told the ABC.
“We’re trying to bring the political parties and groups of Australians together so we can try to move some of the big issues in our country forward and certainly that issue around JobSeeker payments is one of them.”
Former Nationals leader Barnaby Joyce said with the end of the fuel excise discount at the end of the month, cost of living pressures are set to increase.
“Real pressures are going on people and unless you want them in poverty, they need to be supported,” he told Seven on Monday.
Recipients of JobSeeker, Parenting Payment, ABSTUDY and Rent Assistance will also get a top-up.
JobSeeker for singles without children will increase $25.70 a fortnight to $677.20, while Parenting Payment Single will rise $35.20 a fortnight to $927.40.
The rate for partnered JobSeeker Payment and Parenting Payment recipients will increase $23.40 a fortnight to $616.60.
Flagging the move in July, Treasurer Jim Chalmers said the government understood pensioners were doing it “incredibly tough when it comes to their costs of essentials like groceries, electricity and petrol and in other parts of the household budget”.
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 "Cost of Retirement – How Much Is Enough for a Comfortable Lifestyle?")
(Feedsy Exclusive)
No one can blame you if, during your 20s and 30s, you didn’t really think much about retirement. If you’ve been putting away a reasonable fixed amount (about 10% of your monthly salary) toward your savings since you first started working, it’s highly possible you’re set for life.
But if you haven’t been saving regularly, and you want to maintain your present standard of living well into retirement, you’ll probably need to save more than half of your annual income.
Of course, the amount you’ll have to save also depends on how old you are now and how early (or late) you plan to retire. If you want to live a comfortable life, you also have to factor in your criteria for what living a comfortable life is all about.
In case you’re feeling a little lost and want to know the average cost of retirement per month, then this article can help.
The Retirement Standard According to ASFA
The Association of Superannuation Funds of Australia (ASFA) invests a ton of resources in keeping track of retirement expenses and providing estimates on the cost of retirement in Australia.
Each year, ASFA releases budgets for seniors who may be single or living as a couple, providing approximations on how much money they’ll need to maintain a modest or comfortable standard of living. The document called the Retirement Standard is a terrific resource if you want to get a fair idea of how much money you should be saving for retirement.
The Standard presents three broad lifestyle categories: a comfortable retirement, a modest retirement, and a retirement completely supported by the Age Pension.
While these ASFA estimates are based on data-based projections, they don’t consider the average monthly cost of retirement homes in the distant future, that is, in case you don’t see yourself living in your own home.
However, the above figures can serve as a guide as you try to build up your retirement fund. And to ensure you cope well with the cost of retirement in the future, it’s best to start saving today.
If this article has inspired you to think about your own unique situation and, more importantly, what you and your family are going through right now, please contact your advice professional.
| Posted in:News |
 "Super for self-employed people – Why and how to pay yourself super")
MoneySmart
(www.moneysmart.gov.au)
You don’t have to pay yourself super, but when you retire, you might be glad you did.
You can make regular or lump sum payments, can usually claim a tax deduction on contributions, and may be able to save tax.
There are advantages to contributing to super:
Work out how much you can save for your retirement.
If you already have a super fund, check that you can make contributions when you’re self-employed. You’ll need to give your fund your tax file number (TFN) so they can accept contributions.
Check if moving from employee to self-employed affects the insurance cover through your super. Insurance terms and conditions vary from fund to fund.
If you don’t have a fund, see choosing a super fund.
There are two ways to contribute, depending on how you pay yourself. If you receive:
You can claim a tax deduction for contributions you make from your after-tax income (known as personal super contributions).
To claim a tax deduction, you need to send a ‘Notice of intent to claim’ form to your super fund and receive an acknowledgement from your fund.
See claiming deductions for personal super contributions on the Australian Taxation Office (ATO) website for detailed information.
Always confirm the details of any super contributions with your accountant or tax agent.
As a guide, employers contribute at least 10.5% of an employee’s earnings to super.
There are limits to how much you can contribute each financial year:
The ATO has more information about super contribution caps.
If you’re on a low income, you may be eligible for government super contributions, see super contributions.
| Posted in:News |
(Feedsy Exclusive)
Proposed changes to superannuation, home buyer support, social security, and more have come out on the heels of the recent federal election and Federal Budget. Here’s what you need to know
Eligibility for many social security benefits is based on your income and assets. Deeming rules impact some income tests for certain concession cards, such as the Low Income Health Card and the Commonwealth Seniors Health Card. The deeming rate is an assumed rate of return on certain investments regardless of actual income, interest, dividends, and capital gains.
The current rates came into effect on 1 May 2020, and the federal commitment is to freeze deeming rates until the year 2024. While the proposed changes won’t decrease income, you may be allowed greater financial investment levels. Your entitlement calculations will automatically be adjusted by the Department of Veterans Affairs or Centrelink.
If you are of your Age Pension age but do not qualify based on income or assets, you may be eligible for the Commonwealth Seniors Health Card (CSHC) because it has its own income test. Your income for the purposes of CSHC eligibility is based on certain retirement income streams and adjusted taxable income.
The income eligibility thresholds are expected to change from $57,761 to $90,000 for single households, $92,416 to $144,000 for couples, and $115,422 to $180,000 for illness-separated couples. If you currently hold a CSHC, you don’t need to do anything. If you become eligible, you need to apply with Centrelink and provide income and identification documents.
Downsizer contributions let people contribute some or all of house sale proceeds — up to $300,000 for an individual or $600,000 for a couple — to superannuation and do not affect other caps. They do not have a “total super balance limit” or upper age limit, unlike personal after-tax and other contributions. The current eligibility age is 65 and will be going to age 60 on 1 July 2022 — the proposal is to reduce it to age 55 on 1 July 2022 instead.
Downsizer contributions can help you raise or maintain pension or other benefit entitlement for you or your partner. They do not count towards your concessional and non-concessional caps.
The following proposed changes relate to buying and purchasing homes.
If you receive social security and sell your primary residence, there is currently a 12-month exemption that applies to a portion of sale proceeds intended towards purchasing, constructing, or renovating your new primary residence. The government is proposing to extend this exemption for another period — the earlier of 12 months or purchase, construction, or renovation of the new primary residence.
The extended exemption would be available under circumstances involving delay over which you had no control and is a discretionary exemption granted by Centrelink or the Department of Veterans Affairs. There remains no income test exemption.
The government is proposing a Regional First Home Buyer Scheme to provide support in the form of a government guarantee of up to 15% of the purchase price for 10,000 first home buyers. This would essentially allow eligible first home buyers to avoid having to pay mortgage insurance. To qualify, you must be an Australian citizen and first home buyer over the age of 18, reside outside a capital city for at least the previous 12 months, live in the purchased property, and have a taxable income up to $125,000 for a single or $200,000 for a couple.
Other support schemes — such as the First Home Super Saver Scheme and state-based programs and grants — will continue to operate in addition to the Regional First Home Buyer Support. Price thresholds will depend on where the property is located.
The proposed commencement date for the Help to Buy scheme has not yet been announced. Help to Buy is a shared equity scheme that provides support — for up to 40% of a new home’s purchase price and up to 30% for a current home — to up to 10,000 people every year. This will avoid the necessity for Lenders Mortgage Insurance, but you will have to have at least a 2% deposit.
After you make the initial purchase, it would then be possible to buy additional property interests (at least 5%) from the government without needing to pay the government rent for its share. Note that where you make more than the annual income caps for two consecutive years, you will have to partly or fully repay the government contribution based on affordability — though the method of determining how this requirement would work has not been announced.
These proposals are not yet law until they are legislated into effect, so commencement dates and details may change. You should not act on these proposed changes without first consulting your financial advisers, who can provide further up-to-date information and help you understand how and if you may be able to take advantage of them.
If this article has inspired you to think about your own unique situation and, importantly, what you and your family are going through right now, please contact your advice professional.
| Posted in:News |
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