Question 1

Are there any rules regarding how long you can transition to retirement? I am 62 and will be happy to work part-time/casually for as long as I’m able. I would like to supplement my income by using a transition to retirement option from my super company. Would I have to nominate an end date to this arrangement? Thanks, Chris

Hi Chris,

No, there are no rules in relation to this. In Australia there is no official retirement age. If you are happy to keep working part time or casually, then you should do so. Not only does it bring in some extra cash but lots of people these days often enjoy the social side and purpose that work can bring.

The tricky thing is making sure you have a supportive employer. Unfortunately, ageism still exists in the workplace, although it is getting better with more employers realising the benefits mature age workers bring, such as experience, reliability and work ethic.

About your super fund, a transition to retirement pension simply automatically converts to a normal account-based pension at age 65. There is not much difference between the two; however, with the account-based pension there is no limit on how much you can drawdown and all earnings are tax free.

Question 2

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I own an unimproved 20-hectare property in a coastal area near Adelaide. Its council valuation is $600,000, and subdivision is prohibited under state law. The land is not suitable for any income-producing activity.

If I build a house on the property, only the surrounding two hectares will be exempt from the Centrelink age pension asset test, but I can’t sell the remaining acreage or make it income producing.

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How would Centrelink view this, as it would make me asset rich but income zero. Thanks, Lily

Hi Lily,

If you move into the home as your main residence, then the home and surrounding two hectares (approximately five acres) are valued separately and not counted under the asset test. The remaining 45 acres have their own valuation and would be asset tested, but not income tested.

If it won’t be your main residence, the whole amount is counted under the asset test but, again, not income tested if you do not receive any income from it.

There are some exceptions and nuances to the above rules for rural customers and/or if there is little scope to earn an income from the land. You would need to contact Human Services in relation to this.

Question 3

My friend is 69 years old and says she only has about $30,000 in super. She’s renting and nervous about next rent increases.

Should she withdraw the money and put it into a savings account? If so, will she be charged tax if she withdraws a minimal amount for cost of living? I don’t know how to help her.

Would she pay tax on full withdrawal under hardship? I believe she gets rental assistant and is on the aged pension.

My friend says she can’t afford to move and is not sure if she will be able to stay. Your advice would be appreciated as she’s not confident and isn’t really computer literate.

Older Australians who rent with no other savings are the group doing it the toughest.

It does sound like your friend should be receiving the full age pension plus rent assistance. As a first step, make sure that is the case and/or offer to take her to Centrelink to confirm.

Your friend can take their super tax free at any time. If that is all the funds she has, then she needs to ensure she spends it carefully.

Your friend could speak with a financial counsellor. Financial counsellors are qualified professionals who provide information, advice and advocacy to people in financial difficulty.

If your friend is facing homelessness, Services Australia may be able to assist, or point you to other organisations who can.

Craig Sankey is a licensed financial adviser and head of Technical Services and Advice Enablement at Industry Fund Services.

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.