Changes to the pension assets test that came into force on January 1 have resulted in some retirees losing some, or all, of their pension entitlements.
The big question now is whether the tighter assets test will encourage people to change the way they plan and behave in the years leading up to retirement to qualify for the age pension.
Human nature being what it is, people tend to worry more about a financial loss than they do about missing out on a potential financial gain. When you apply this fear of loss to the tightening of the pension assets test, there is a danger that people could become so worried about losing even a few dollars of age pension that they make knee-jerk financial decisions that leave them worse off in the long run.
Everyone’s retirement aspirations and financial circumstances are different. But in the long run, a strategy that maximises your sources of readily accessible cash in retirement, rather than focusing on a single income stream, is more likely to provide a comfortable and worry-free lifestyle.
Please read more about the changes to the pension assets test in our latest Snapshot newsletter.
Photo by Pascal Maramis