Many older Australians are going to feel the impact, when major changes to the aged pension begin on Sunday, January 1.
IMB Bank’s financial planning practice manager Rob Weston said a significant number of people will be affected.
“There will definitely be a lot of people in this area who will not have as much money in their wallets in 2017 as they did in 2016,” he said.
“It is not too late to review your assets and there are a few things you could look at doing to try and keep as much of your pension as you can.
“Try and restructure your assets to replace the income you will lose and talk to an accredited financial planner about how you can minimise the impact.”
There will definitely be a lot of people in this area who will not have as much money in their wallets in 2017 as they did in 2016.- Rob Weston
Mr Weston said one of the key issues is that many pensioners simply don’t understand the changes and are therefore unprepared.
The two major changes in the aged pension reform is the assets test threshold and the taper rate.
A couple who owns their own home and has investable assets of more than $600,000, could have their age pension cut by up to $5714.
Worse still, if you own you own home and have investable assets of $816,000 or more, it is likely you will lose your pension altogether.
The taper rate is another issue impacting aged pensioners.
Currently for every $1000 you have over the asset threshold, you lose $1.50 (75c for couples) per fortnight.
In 2017, aged pensioners will lose $3 per fortnight for every $1000 you have over the asset threshold, meaning the pension will reduce at a faster rate.
“There are many pensioners who own their own home, but also have funds in super and an investment property,” Mr Weston said.
“These people are not necessarily wealthy but their pension will certainly be cut under the new rules.”
An IMB survey in November of people at retirement age revealed 80 per cent were not confident about how much they would need to retire.
“At a time when they should be enjoying their lives, many of our aged pensioners are confused and scared,” Mr Weston said.
“They don’t understand the new legislation and they are worried about how they will make ends meet.”
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