Cost-of-living measures dominated the headlines when it came to the Federal Budget announcements for 2024-25.
And there’s no doubt they are welcome for anyone on a retirement income stream, Age Pension, or a combination of the two.
Among the headline announcements on the night was the $300 energy bill rebate, to be paid quarterly, which will offset the electricity costs of every household in the coming year.
The 10% increase to the maximum Commonwealth Rent Assistance payment was another tangible Budget night bonus for many.
But there were a range of other measures designed to keep money in the pockets of more retirees and pension recipients in the new financial year.
The government will keep deeming rates – which are used to estimate the amount of income social security recipients receive from their investments – at current rates for a further 12 months until 30 June 2025.
That means the lower rate, which applies to every dollar of investments below $60,400, remains at 0.25% for a single person, while the upper rate (for amounts above $60,400) stays at 2.25%. For pensioner couples, the first $100,200 attracts the lower rate, while anything above that is deemed to earn 2.25%.
From 1 July, the deeming thresholds will also increase to $62,600 for singles and $103,800 for pensioner couples.
For some Age Pension recipients with investments, freezing the deeming rates preserves thousands of dollars in benefits that may have been lost to them had the deeming rates on their investment income gone up.
For example, our calculations show a single Age Pension homeowner with $300,000 in investments could save up to $5,625* in entitlements that would otherwise have been lost in the year ahead.
Around 876,000 income support recipients are expected to benefit to some extent, around 450,000 of whom receive the Age Pension.
It also means there will be no negative impact for Commonwealth Seniors Health Card holders and means-tested aged care recipients.
Under the government’s Stage 3 tax cuts, from 1 July all taxpayers, including those on lower incomes, will get a tax benefit.
From 1 July 2024, the tax cuts will:
reduce the 32.5% tax rate to 30%
increase the 37% tax rate threshold from $120,000 to $135,000
increase the 45% tax rate threshold from $180,000 to $190,000
$30,000
$1,542
$1,188
$354
$45,000
$4,767
$3,963
$804
$70,000
$13,217
$11,788
$1,429
$100,000
$22,967
$20,788
$2,179
$150,000
$40,567
$36,838
$3,729
$190,000
$56,167
$51,638
$4,529
Note: These amounts do not include Medicare levy.
All 13.6 million taxpayers will receive a tax cut from 1 July, including many older workers who may be working part-time.
It’s good news for the two in three Australians who expect to keep working past retirement age, most of whom envisage working fewer hours or in a less demanding role.
According to the CFS Rethinking Retirement report, for which 2,247 Australians were interviewed between October to December 2023, less than a third of Australians plan to stop working completely once they reach retirement age.
A range of health-related Budget measures will help keep costs down for retirees and older Australians.
These include:
increases in the threshold people on lower incomes must reach before they must pay the Medicare levy in 2023/24. For example, for eligible single seniors and pensioners it increases from $38,365 to $41,089. The couple threshold has increased from $53,406 to $57,198.
a five-year freeze on the maximum co-payment for a PBS prescription for pensioners and other concession cardholders that will see the cost of medicines on the PBS capped at $7.70.
more Medicare Urgent Care clinics offering extended-hours access to bulk-billing GPs.
the listing of new medicines on the Pharmaceutical Benefits Scheme for the first time. For example, a year of treatment of the heart disease drug, tafamidis, would normally cost $122,000. From 1 May 2024, this medicine was included in the PBS, resulting in a cost per script of only $7.70 for pensioners and eligible concession cardholders.
The freeze on deeming rates will help ensure older Australians are not paying more to access means-tested government-funded aged care services.
Additional funding will also help improve access to subsidised in-home, residential and short-term aged care services, including:
Find out more about aged care costs here.
Make sure you’re aware of the regular entitlements you can access, including ensuring you’re getting all the Age Pension you’re entitled to.
If you need advice on how to manage your retirement income in the year ahead, you can find an adviser here or book a call to talk to one of our consultants.
* Calculation based on a single homeowner Age Pension recipient with $300,000 in financial investments (and no other assessable income or assets). Calculation uses current social security rates and thresholds as at 20 March 2024, and compares a continued freeze in current deeming rates for 12 months against higher deeming rates of 4% (lower rate) and 6% (higher rate) for 12 months
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