The Self-Funded Retiree’s Guide: Key Information & Tips

What is a self-funded retiree?

A self-funded retiree is someone who funds their retirement income from their investments or superannuation without relying solely on social security benefits such as the Age Pension. You’re a self-funded retiree if you can meet your living expenses without Centrelink pension payments in Australia.

Many self-funded retirees have worked hard and saved diligently throughout their careers to achieve their financial future. While they may not get government assistance, they can still access some concessions and benefits, such as the Commonwealth Seniors Health Card, to help with costs like healthcare and utilities. Retirement should be about enjoying the fruits of your labour, not worrying about money, so knowing what’s available can make all the difference.

What are the cut-offs of age pension payments?

The eligibility requirements to receive an age pension are varied to account for a range of different lifestyles. Typically speaking, the higher the monthly income stream, the lower the monthly payments from age pension. 

The table below summarises the fortnightly income limits for different living scenarios in retirement. They are designed as a guide, and personal eligibility is evaluated against the results of an income and assets test, Work Bonus and Healthcare concessions. 

Data from: Services Australia

If your monthly income from your superannuation balance and other investments surpasses the above, you will be categorised as a self-funded retiree, but that’s not to say there aren’t concessions and benefits that will be useful to you, after all, retirement should be about enjoying the fruits of your labour, not worrying about money, so knowing what’s available can make all the difference.

Concessions and entitlements for self-funded retirees

There are a range of concessions offered across Western Australia that ensure your well-deserved retirement fund stretches a little further. These can be viewed on the WA Gov website and include all sorts, from reduced entry fees to HBF Arena to concessional rates of transfer duty if you choose to sell your home and downsize. Since eligibility is based on an income test and assets test, it’s important to stay informed about policy changes. After all, no one wants to be missing out on benefits if you’re entitled to them!

The Commonwealth Seniors Health Care Card gives access to discounts on healthcare services, prescription medications and other essential, healthcare expenses, making medical costs easier to manage.

To qualify, you must have reached the pension age but not received income support payments from Centrelink or the Department of Veteran Affairs (DVA). Many businesses also offer discounts to cardholders, so you can stretch your retirement dollars further and make everyday living more affordable.

Tax and super

Self-funded retirees don’t receive an Age Pension but may still have tax obligations. If you apply for superannuation withdrawals before 60, this is deemed as taxable income, and you may be required to direct a portion towards your tax bill. Investment earnings in a super account can also be taxable, and capital gains tax applies when you sell investments that have increased in value.

However, for most retirees over 60, super income is tax-free and the Seniors and Pensioners Tax Offset (SAPTO) can reduce tax liabilities. Understanding tax laws and planning ensures you get the most out of your savings. Your tax liabilities can be a little cumbersome to wrap your head around in amongst our busy lives. We recommend speaking to a financial planner to ensure you’re able to make the most of your hard-earned cash!

Income streams and investments

A well-planned retirement includes a steady income to support your lifestyle. Many self-funded retirees build a diversified investment portfolio, including shares, real estate or managed funds, to further retirement needs and provide financial stability.

An account-based pension is popular as it provides a regular income from your super while offering tax benefits. Annuities can also offer a guaranteed income for life or a set period. Again, to determine the right route for your retirement make sure to speak with a financial planner.

Healthcare and well-being

Good health is priceless in retirement. Self-funded retirees should assess their healthcare needs and explore different insurance options to be covered for unexpected medical expenses.

Private health insurance can provide access to more services and shorter waiting times, while the Commonwealth Seniors Health Card can reduce medical costs by a lot. Planning for potential healthcare expenses, including aged care, brings peace of mind and a good quality of life.

Commonwealth senior health card

Although self-funded retirees are financially independent, they may still be eligible for a part-age pension based on their income and assets.

Additional concessions, such as the Pensioner Concession Card, offer discounts on utilities, public transport and healthcare. These benefits help retirees stay active and engaged in their communities without the financial stress of high living costs. Since eligibility is based on an income test and assets test, it’s important to stay informed about policy changes.

Financial planning and management

Estate planning ensures your assets are distributed according to your wishes. This means having a legally binding will, appointing power of attorney for financial and medical decisions, and managing your superannuation balance and pension accounts well.

Read our article to learn more about estate planning. 

It’s also important to review your income regularly, considering investment returns, cost-of-living changes and tax implications. Adjusting your financial plan as needed ensures stability and peace of mind in retirement.

Self-funded retirement management

Retirement doesn’t mean you can stop earning money, in fact, a successful, self-funded retiree should ensure ongoing financial checkups and review their income streams, monitor investments and adjust spending where needed to have enough funds to live the lifestyle they want. Strategic tax planning can minimise liabilities and maximise income. By being proactive with financial management, retirees can continue to be financially independent and secure right into their later years.

Retirement is about enjoying life and throwing yourself into hobbies you were always ‘too busy’ to take up. Whether it’s travel to new places, meeting new people or spending more time with loved ones, self-funded retirees, like any other retirees, should prioritise what makes them happy. 

Stay informed about financial regulations, tax changes and investment opportunities so you can make confident decisions and live comfortably and securely. Self-funded retirement = financial freedom and choice. With planning, investing and knowing your tax and concession options, you can make the most of your time.