What a difference a day makes.
Reaching pension age and your take home pay.
Working out the impact of being eligible for the age pension on your household budget can take some serious number crunching if you are still working.
And more and more older Australians are staying in the workforce.
As of April 2021, 19% of men and 11% of women over 65 were still working. And this rate is increasing. In fact - in the last 20 years the rate of workforce participation for older Australians has almost tripled.
To get to the bottom of how your take home pay from your job can impact a bunch of other important parts of your budget, you need to take a closer look at how your income impacts other parts of your family budget - like tax and eligibility for entitlements and payments. And this whole story changes once you reach age pension age.
One day, it’s just about your pay - the next day, a bunch of other things come into play - like your savings and the savings of your spouse - whether you own a home, a rental property. Your cars and caravan.
And which day is the next day? Well, it’s not actually your birthday, it’s when you reach 66 and a half, and when you turn 67 as of 1 July 2023.
How do you know how much you are actually earning?
Source : Australian Bureau of Statistics
Your household income may be more complex than you think.
We all know when it comes to tax, that the more you work, the higher your tax rate is likely to be.
However, older Australians reaching pension age have a whole lot of other things to think about.
This is because the money you have to spend is not just about your income. There are taxes, benefits and allowances - which all depend on your unique family situation. And reaching pension age means many of these rules come into play.
And income from your job could make a big difference to your bottom line - depending on your situation.
For older Australians, the number of government rules and calculations you need to plow through to understand your income position is mammoth.
And this is just the start of the story of making informed decisions about work and your financial future.
Where it really gets interesting is looking at how much your household benefits from each day you work. This means you might make a decision on how much you will work based on how much you actually benefit from your day’s work.
Changes in income may result in different impact of tax offsets, rental assistance, and eligibility for government discounts and rebates applied to different costs your household may be subject to - like utilities, rates and the cost of a drivers license.
Looking at a change of income based on a day’s work is a really useful start to understanding how your income impacts your household bottom line.
It’s not always as it seems.
Compare the pair
To look more closely at the impact of income on your household budget, we are going to look more closely at people with similar work situations, but different financial situations, to understand the impact of government rules.
Stay tuned!
Importantly - the same analysis provided to the people in the examples can be applied to your situation, to help you understand all you need to in order to make more informed decisions.
Brendan
0412 181 031