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.

Comments

My October challenge

Decluttering can be overwhelming. I've been stuck. Shelves and boxes and drawers full of stuff I should go through but not sure where to start. Aaagh - there's so much of it. The solution? So for myself (and for you if you want) I've developed a strategy. I've picked 31 categories in advance. I plan to tackle one item per day of October. If I miss a few that's OK. The point is to overcome overwhelm. To focus on one thing at a time. To move forward instead of being stuck. My favourite way to declutter is to sell online . (I even wrote a free ebook of tips for selling online). I also like to recycle or upcycle things. Wanna join in? I've chosen categories where I think most people would have excess. If there's a category you have already dealt with, that's cool. Have a rest day - or go even further in one of the previous areas. The list Ok so here's my plan for this October. Bookmark this post or download the picture of my notes. For each category I ...

5 Reasons why we hoard - and they're wrong

"Less is More" is one of the catch-cries of downsizing. Often the fewer things we have the more we value them. So it's a great title for a book that's basically a manual for how to de-clutter your home. The introductory chapter of Less is More: How to De-clutter Your Life gives some great insights into why we find it so hard to reduce our stuff. Here are 5 of them - the last one is one of the biggest for me. 1. The cost of holding on. We were raised by our parents and grandparents and in their day items were expensive and space was cheap. It made sense in those days to hold onto stuff just in case you ever needed it. But today housing is expensive and items are cheap. It's hard to change a habit, but now we save much more by downsizing. 2. Keeping it in the family. For some reason we prefer to give things to those close to us. Again this was viable in the days of big families and lots of children to receive hand-me-downs. But these days we have smaller fa...

20 unplugged ideas

May 1-7 is Screen-Free Week . It's about spending time away from the screen and more time with each other - or doing things we love. It's a great chance to break the work-tired-watchTV-ads-shop-work cycle. This list of twenty alternative ideas is great for screen-free week. It's also a great reminder of things we could enjoy if we're shopping and spending less - and maybe working less and enjoying life more.

But wait... there's less!

Search This Blog