Seniors steps to financial fitness

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FINANCIAL fitness doesn’t stop when you finish working.

In fact, retirees often have to work harder to keep in shape money-wise because they no longer have a constant supply of employment income to recover from any problems.

AMP financial adviser Darren James says regular fitness checks can ensure your retirement income plan stays in shape. Here are five areas to monitor.


You need to keep a step ahead of age pension changes to make sure youre receiving all the benefits you possibly can.

Significant changes to the age pension assets test taking effect from January 2017 could mean you need to rearrange some of your financial affairs before this, James says.

Its up to you to check that Centrelink has updated details and is giving you the correct payment. For example, the value of some shares you hold may have gone down over the past six months which could mean increased pension payments.


Cutting the value of your assets often delivers some extra age pension. Strategies may include gifting money to children and grandchildren, although there are limits, or spending money on a holiday.

Retirees can reduce their assets by prepaying funeral expenses or by investing up to $12,250 in funeral bonds, James says.

Make sure Centrelink values assets such as car and home contents at current market value and not the purchase price, insured value or replacement value. They may not seem significant but they all add up to make a difference.


You need to plan for the worst to stay financially strong in retirement. Whether its a collapse in financial markets or the death of a spouse, its wise to work out what you would do after these events.

Planning for Prosperity principal Bob Budreika says it can be pretty punishing to watch your retirement assets fall sharply when you rely on them for income.

Theres nothing worse than drawing down an income from an investment thats losing value. In the accumulation phase when you are adding in money, when markets go up and down its not such a big issue.

Many financial planners use a buckets strategy where three years of immediate financial needs are kept in cash, while the rest sits in growth assets such as shares, property and managed funds.

The death of a spouse is painful emotionally and also can hurt you financially. Budreika says the full age pension for a couple is about $33,000 while a single person receives about $21,500.

It really makes a significant difference when someone passes away. Consider how financially secure you would want to leave your spouse.


If you have a home, dipping into its equity through a reverse mortgage can provide extra income.

Budreika says you can set up the loan facility as a safety net, and there are no rules saying you need to draw down at any time. You dont accrue any interest until you actively draw down, he says.

James says you should think twice before rushing into a reverse mortgage because they may affect pension entitlements. Your own home is exempt from the assets test but any cash withdrawn via reverse mortgages is assessable, so dont go nuts.


Staying at work a few years longer even if part time will significantly strengthen your finances, and Centrelinks work bonus is available for workers over age pension age.

You can continue to work and receive the age pension because under the work bonus the first $250 of income per fortnight is not assessed by Centrelink, James says.