Is The Age Pension Part Of Your Retirement Plan?

When people think about retirement, one of the first questions they often ask is, ‘Will I qualify for the Age Pension?’

The answer isn’t always straightforward.

Many Australians assume you either receive the Age Pension or you don’t. In reality, many retirees receive a part pension alongside income from superannuation, investments and personal savings.

Understanding how the Age Pension fits within your broader retirement strategy can help you make more informed financial decisions and plan with greater confidence.

What Is the Age Pension?

The Age Pension is the main income support payment for people who are Age Pension age, which is 67 years or older.

Administered by Services Australia, it is intended to help meet everyday living expenses and provide a safety net for those who have reached retirement age.

Who Is Eligible?

To receive Age Pension you must be all of the following:

67 years or older (born on or after 1 January 1957),
Under the income and assets test limits, and
An Australian resident, normally for at least 10 years.

Additional residency rules and eligibility requirements may also apply. You can read the full eligibility criteria on the Services Australia website, here.

While many people think of the Age Pension as an ‘all or nothing’ entitlement, it is actually means tested. This means the amount you receive depends on your individual financial circumstances.

In other words, even if you don’t qualify for the full amount, you may still be entitled to a part pension, as well as to the valuable concessions that often accompany it.

Understanding the Income and Assets Tests

When assessing your eligibility and payment rates, Services Australia applies both an income test and an assets test.

If you have a partner, income and asset information is required from both of you.

Income Test

All sources of your income (and your partner’s, if relevant) are assessed. This includes financial assets such as savings, shares and superannuation.

You will need to report any:

Employment Income

Your gross income is the amount your employer pays you before tax and other deductions. You can find your gross pay amount on your payslip. Exemptions apply. If you are receiving pension payments, you must know what, when, and how to report.

Investment Income

Income from financial investments, such as bank accounts, term deposits, shares and managed funds. Rather than using the actual income you receive from many financial investments, Services Australia generally applies deeming rules to estimate the income they earn.

Superannuation Income Streams

Regular payments from a superannuation income stream, such as an account-based pension or annuity. How these payments are assessed depends on the type of income stream and when it commenced, with many account-based pensions assessed under the deeming rules.

Rental Income

Income you receive from renting out an investment property. Generally, Services Australia assesses your net rental income after allowing eligible expenses, rather than the gross rent you receive.

Oher Assessable Income

Other income that may be counted includes business income, overseas pensions, royalties, certain trust distributions and some other regular income sources. Services Australia considers income from a wide range of sources when assessing your Age Pension entitlement.

Thresholds

If your income exceeds certain thresholds, such as tipping over the free area; your Age Pension may reduce gradually before eventually ceasing at the cut-off point.

What is a free area?

This is the amount of income or assets you can have without affecting your pension. If you’re below the free area, you may receive the maximum Age Pension (provided you meet the other eligibility criteria).

What is a Limit or cut-off point?

This is the maximum amount of income or assets you can have before your Age Pension reduces to $0. Once you reach this point, you’re no longer eligible for an Age Pension.

Pension situation	Income free area per fortnight	Reduction once income exceeds free area	Fortnightly income cut-off point
Single	Up to $226	50 cents for each dollar over $226	$2,627.80
Couple living together	Up to $396 combined	25 cents for each dollar over $396 for each person	$4,016.80 combined
Couple living apart due to ill health	Up to $396 combined	25 cents for each dollar over $396 for each person	$5,199.60 combined
Transitional rate pensioner — single	Up to $226	40 cents for each dollar over $226	$2,670.25
Transitional rate pensioners — couple living together	Up to $396 combined	20 cents for each dollar over $396 for each person	$4,340.00 combined
Transitional rate pensioners — couple living apart due to ill health	Up to $396 combined	20 cents for each dollar over $396 for each person	$5,284.50 combined

Disclaimer: These thresholds are current at the time of publication and subject to change.

Services Australia notes that the cut-off point may be higher if a person receives Rent Assistance or uses the Work Bonus, and lower if they do not live in Australia.

Understanding how these tests apply to your circumstances can help you make informed decisions about when to access super, structure investments and plan your retirement income.

Asset Test

The Asset Test considers the value of your assets, your homeownership status, and if you’re in a relationship. Your assets include any property or possessions you own in full, in part, or have an interest in. This includes both:

Assets held outside Australia.
Debts owed to you.

Importantly, your principal place of residence is generally exempt from the assets test.

Relationship status	Homeowner – Full pension if assets are at or below	Homeowner – Part pension cuts out at	Non-homeowner – Full pension if assets are at or below	Non-homeowner – Part pension cuts out at
Single	$333,000	$709,500	$600,000	$976,500
Couple (combined)	$499,000	$1,067,000	$766,000	$1,334,000
Couple separated due to ill health (combined)	$499,000	$1,260,500	$766,000	$1,527,500

Disclaimer: These thresholds are current at the time of publication and subject to change.

If your assessable assets exceed the full pension threshold, your Age Pension is reduced by $3 per fortnight for every $1,000 of assets above the relevant limit.

Once your assets reach the applicable cut-off point, you are no longer eligible for the Age Pension under the assets test.

Outcome:

After assessing both tests, Services Australia uses whichever test results in the lower Age Pension entitlement.

Beyond the Pension

Payments, Concessions and Support

In addition to regular Age Pension payments, eligible recipients may also qualify for valuable concessions and support, such as the Pensioner Concession Card, discounted medicines through the Pharmaceutical Benefits Scheme (PBS), and state or territory concessions on services including rates, utilities and public transport.

Common Age Pension Myths

Myth: You can’t work while receiving the Age Pension.

You don’t need to stop working to receive the pension, with entitlements reduced gradually depending on earnings.

The Australian Government also offers the Work Bonus, a scheme that helps reduce the amount of your employment income that counts towards the income test for your pension. It’s an incentive for older Australians to participate in the workforce by offsetting some of your income.

Myth: Having super means you won’t qualify.

Many retirees assume that having superannuation automatically excludes them from receiving the Age Pension. In reality, eligibility depends on the value of your assets and income, not simply whether you have a super balance. Many Australians receive both income from their superannuation and a full or part Age Pension.

Myth: Having savings means you’re ineligible.

Depending on how your income and assets are assessed, you may still qualify for a part Age Pension if you have substantial savings or investments.

Myth: Once I retire there’s nothing more I can do.

Your circumstances will continue to evolve as markets change, legislation is updated and your spending needs shift over time. Regular reviews can help ensure your retirement strategy continues to support your lifestyle and long-term goals.

Someone may not qualify for pension payments when they first retire because their assets exceed the thresholds. However, as they gradually spend some of those savings during retirement, their entitlement to Age Pension payments may increase. This additional income can reduce reliance on superannuation, helping retirement savings last longer. 

Myth: I should spend my money just to qualify for the Age Pension.

While government entitlements are important, making financial decisions solely to increase your pension may not leave you better off overall. Retirement planning should focus on your long-term financial wellbeing rather than maximising one particular benefit.

Retirement Planning Is About More Than Maximising the Pension

While it’s natural to want to maximise any government entitlements available to you, the Age Pension should generally be viewed as one component of a much larger financial picture.

Making decisions solely to increase your pension entitlement may not always lead to the best long-term financial outcome.

Instead, effective retirement planning considers your overall financial wellbeing: balancing income needs, investment growth, tax outcomes, estate planning and lifestyle objectives to help you enjoy the retirement you’ve worked hard to achieve.

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How Aintree Group Wealth Can Help

Retirement is one of life’s biggest financial transitions, and navigating the rules can quickly become complex.

At Aintree Group Wealth, we take a holistic approach to retirement planning. Our advisers work with you to understand your goals and develop a tailored strategy that considers every aspect of your financial position, not just your Age Pension eligibility.

Whether you’re approaching retirement, planning your retirement income or simply want to better understand your options, we’re here to help you make informed decisions with confidence.

If you’d like to discuss your retirement strategy, contact the team at Aintree Group Wealth to arrange a conversation with one of our financial advisers. It’s never too early to start the conversation.

Aintree Group Wealth

This is general advice only and has not been prepared with your individual situation or needs in mind. For personalised advice, we highly recommend that you seek professional guidance from a qualified adviser.

Is The Age Pension Part Of Your Retirement Plan?

What Is the Age Pension?

Who Is Eligible?