With many retirees undoubtedly feeling the pinch of increased living costs eating away at their retirement savings, many are hopeful that this year’s Federal Budget will help to relieve some of that pressure.
And the good news is….fortunately it has.
The 2019-20 Federal Budget focused on three main areas to provide relief for retirees – more space for aged care, assistance for welfare recipients and increased flexibility to make super contributions.
More age care space available
The Government has committed to increased funding to make more aged care spaces available for Australians in the future – an important commitment for those in need. The Government has also committed to making further improvements to the quality, safety and accessibility of residential and home care services.
Assistance to welfare recipients
To offset increasing living costs, particularly for essential utilities such as electricity, an immediate one-off payment is proposed of $75 for individuals and $125 per couple for eligible welfare recipients to assist with their next power bill.
This includes those on the Age Pension, Carer Payment, Disability Support Pension, Parenting Payment Single, the Veterans' Service Pension and Veterans' Income Support Supplement, Veterans' disability payments, War Widow(er)s Pension, and those receiving permanent impairment payments under the Military and Safety Rehabilitation and Compensation Acts.
Increased flexibility for older Australians to make super contributions
From 1 July 2020, individuals aged 65 or 66, will be able to make additional contributions to super even if they are no longer working - a welcome change for many Australians looking to boost their income in retirement.
This measure also means 65 and 66 year olds will be able to take advantage of the three-year bring forward arrangements from this date which enables them to make up to three years of after-tax contributions in a single financial year. Under the current contribution caps, this means retirees may be able to contribute up to $300,000 in additional after-tax contributions to their super.
In addition, from 1 July 2020 there will be an increased ability to make spouse contributions to super. Currently, this is only an option provided the receiving spouse hasn’t turned 70. The existing age limit will be increased to allow contributions to be made on behalf of a spouse provided they have not yet turned 75.
It is always important to remember that at this point, the Budget measures are only statements of proposed changes, and are not yet law.
With an election expected to occur in May 2019, it is still uncertain whether these proposals will become law.
Seek professional advice
Until these changes become law, you may want to consider seeking professional advice to understand how the implications of these changes may impact your financial situation in retirement.
The information on this website has been prepared by BT, a part of Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian Credit Licence 233714 (Westpac), and is current as at 2 April 2019.
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Any case studies and examples used on this website are purely for illustration only.
The tax position described on this website on the 2019-20 Federal Budget update is a general statement and is for guidance only. It has not been prepared by a registered tax agent. It does not constitute tax advice and is based on current tax laws and our interpretation. Your individual situation may differ and you should seek independent professional tax advice. It is important to note that the policies outlined in this website are yet to be passed as legislation and therefore may be subject to change or further refinement. Superannuation is a means of saving for retirement, which is, in part, compulsory. The government has placed restrictions on when you can access your investments held in superannuation. The Government has set caps on the amount of money that you can add to your superannuation each year and over your lifetime on both a concessional and non-concessional tax basis. There will be tax consequences if you breach these caps. For more detail, speak with a financial adviser or registered tax agent or visit the ATO website.