Australian couples approaching retirement age have discovered a clever strategy to boost their age pension payments while continuing to work. The method involves a simple adjustment to work patterns that can significantly increase fortnightly payments from Centrelink.
Understanding the Work Bonus System
The key to this pension optimization strategy lies in Centrelink's work bonus scheme, which allows pensioners to earn additional income without affecting their pension payments. Financial expert Nick Bruining explains that many couples are unaware of how strategically managing work income can create substantial financial benefits.
The work bonus currently permits pensioners to earn up to $300 per fortnight from employment without impacting their age pension entitlements. This means a working pensioner can receive this amount completely free from the income test that normally reduces pension payments.
The Couple's Strategy That Pays Dividends
Bruining details a specific case where a reader asked about optimizing their financial situation. The husband continues to work while his wife has reached pension age. Many couples in this situation assume they must structure their finances based on their combined circumstances, but there's a better approach.
By having the wife claim the age pension as a single person rather than as part of a couple, she may qualify for higher payments while her husband's employment income is assessed separately. This strategy works particularly well when one partner has significant employment income that would normally reduce the couple's combined pension entitlement.
The beauty of this approach is its simplicity. No complex financial products or risky investments are required - just a different way of structuring the pension application that complies with Centrelink regulations.
Maximizing Your Retirement Income
Bruining emphasizes that this strategy demonstrates why seeking professional financial advice is crucial for Australians navigating the pension system. Many people leave money on the table by not understanding the various exemptions, thresholds, and assessment methods available to them.
The work bonus system includes an unused concession balance that can accumulate up to $11,800, allowing pensioners to occasionally earn larger amounts from irregular work without penalty. This feature provides additional flexibility for those who undertake contract work or seasonal employment.
Couples should carefully consider their individual circumstances and seek qualified advice before implementing this or any other pension optimization strategy. Factors such as asset levels, other income sources, and future work plans all influence the best approach for each situation.
With careful planning and understanding of Centrelink's rules, Australian couples can potentially increase their retirement income by thousands of dollars annually through simple, compliant strategies like the one outlined by Bruining.
