Many born before 1946 or the Baby Boomers have been well served by shares paying fully franked dividends. But as longevity kicks in, they could need to factor in a greater emphasis on growth stocks.
It was former US President Herbert Hoover who said we have gold because we cannot trust governments. Globally, that sentiment is ringing true for many investors.
Looking for a senior’s discount?
The pandemic has been devastating to everyone around the world, but among those hardest-hit have been self-funded retirees. The combination of dividend cuts and near-zero interest rates is forcing more Australians to eat into their capital, as they deal with higher prices for everything from food and water to basic services. The 50 per cent reduction in the minimum pension withdrawals was welcomed, but is only really relevant for those who have more than enough capital for their retirement; which isn’t many.
Did you know many retirees are eligible for the Commonwealth Seniors Healthcare Card and don’t know it?
The Commonwealth Seniors Healthcare Card has been around for many years, but is probably the most misunderstood benefit available. The eligibility is simple, you must be over Age Pension Age, be a long-term resident of Australia and meet a simple income test. The only restriction is that you cannot be receiving any benefit from the Department of Veteran’s Affairs or Centrelink already.
Age Pension Age
Your Age Pension Age depends on your date of birth, but has been simplified in recent years. It is 66 years of age for those born between 1 January 1954 and 30 June 1955, 66 and 6 months for those born prior to 31 December 1956, and 67 for those born after this date.
Residency Requirements
Simply put, you just need to have been a resident of Australia for at least ten years.
Income Test
The CSHC is one of the few Centrelink benefits on which an assets test does not apply. You simply need to meet the requirements of an income test to be eligible. The requirements are fairly straightforward, if you are single your ‘adjusted taxable income’ must be below $55,808 and if you are part of a couple it must be below $89,290.
In the case of superannuation assets, which are not taxable, the standard Centrelink deeming rates apply along with all other financial assets. In this case, if you are single, you are deemed to earn an income of 0.25% on all assets up to $53,000 and 2.25% above this amount, regardless of the actual return you receive. For couples, this increases to $44,000 each. So you can perceivably have a substantial superannuation balance and still be eligible.
What do you get in return?
One of the key stimulus measures resulting from COVID-19 lockdowns was the ‘Economic Support Payments’ of $750 that were paid twice to pensioners and CSHC holders. But more importantly, the benefits are as follows:
- Access to discounted medicine under the Pharmaceutical Benefits Scheme (PBS);
- Bulk billing at medical centres;
- Larger refunds on medical costs;
- Discounts on electricity and gas charges;
- Discounts on property and water rates;
- Lower public transport fares.
How do you apply?
As with everything Government or tax-related, you must apply through your MyGov account, which can be a complex process. Most experienced financial advisers should be able to assist.
