The passing of a loved one is tragic and devastating for those left behind, whether it’s your parent, spouse, sibling or friend. The numbness of loss seems to morph into the reality of life moving on.
But something that will abruptly jerk a family back to ground is the realisation of how Centrelink will treat an Age Pensioner who has lost their partner.
After a 14 week grace period, Centrelink will change the calculations from the Couple rates to the lower Single rates. This both reduces the payment amount, and also lowers the thresholds used to assess income and assets.
For example, a couple with $500,000 of retirement savings and/or other assets (the family home is not included) could receive a combined pension of roughly $25,000 per year. After losing their husband or wife, the survivor would now receive a pension of just $3,600 a year.
That’s a loss of $21,400 a year.
On average in Australia, a widow who loses her husband lives for another 15 years. A widower who loses his wife lives for another 9 years. That adds up to a lot of pension lost, potentially more than $300,000.
There are alternative estate planning options available, and these can help reduce the amount of loss, or even completely avoid any pension reduction. And in some circumstances, the surviving spouse might even receive an increase in the pension.
One particular Estate Planning strategy can avoid losing as much as $21,000 a year of pension, which would earn $315,000 over 15 years.
If you’re a couple with retirement savings and/or other assets in the range of $250,000 - $1,250,000, you should reconsider your estate planning strategy.
Contact us now to find out how much your family could save.