How to boost your pension by 50%

People in the superannuation industry will say you need millions to retire. But it doesn't have to be that way.

The Barefoot method

If you've got millions in retirement good for you. But if not there's another way as outlined in book the Barefoot Investor. It's quite an effective strategy especially for those of who have had low income, variable income, or who are retiring early.

The idea is, by 67, to get your superannuation balance close to the maximum you can have before it starts reducing your pension.

Assuming you don't have other significant investments, at this point you can get the full age pension, plus some handy superannuation income. (Barefoot Investor also suggests some very-part-time work to boost it even more.)

How much are we talking?

Depending on your situation, you could get 50% more than the age pension.

For instance (as of June 2020) a single homeowner gets $22,375 age pension. At 67 a super balance of $225,000 would provide additional income of $11,250.

Likewise a couple who don't own a home get a $33,732 age pension. At 67 a super balance of $400,000 would provide additional income of $20,000.

As far as I understand it, all of this is tax-free (but I'm not a tax expert).

Edit

This is the part of the post where I previously had a calculator. The idea was that you could work out if this could be a possibility for you.

Realistically I'm not going to be able to update it each year as the government thresholds change, so I've removed the calculator.

Also, most people who tried it found out they would be way over the threshold. This should be great news (having lots of money in retirement). But some felt disappointment that they couldn't get the boost. Even though their retirement scenario would be far better than someone who could benefit.

For all these reasons, I've removed the calculator link. If you want to know more I recommend borrowing the Barefoot Investor book from the library.

Big disclaimer

This is a summary of something I read in the Barefoot Investor book, accompanied by some maths. It is not financial advice, and does not take into account your individual situation. Please evaluate you own circumstances and seek your own financial advice.

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