What The Budget Means For Elderly Australians

Our elderly are often our weakest members of society - neglected and an afterthought for many of us. For all the contributions they have made to our workforce, our lives and our communities, we need to ensure that they have at least an adequate means of financial and community support. 

A large proportion of elderly people are surviving off the age pension and just getting by. At times, the age pension has not moved in line with the increased costs of living. We have seen the costs of rent spiral upwards and our groceries are priced at a premium. For the elderly on pensions, these basic necessities make up a large proportion of their expenditure. 

Increase in pension payments

Last night's budget handed down some very important benefits for the elderly. Single pensioners will now receive $32.49 more a week and couples will get an extra $10.14. For single pensioners, the age pension equates to 27.7% of the total male weekly wage. 

Pensioners earning $15,000 a year will be $74.14 better off each week, while people earning under $30,000 each year will have an extra $33.39 each week. This will bring them more in line with the increased costs of living so that they can afford more of life's basic necessities. 

$32 a week does not mean a lot for working Australians, but for pensioners every dollar counts. These increases in age pension payments are estimated to cost $2.7bn in 2010 and more than $3bn in 2011.

Some have been calling them the winners of the budget - but does giving someone an extra $32 a week who really needs that money to survive a winner? They are simply getting what they should be entitled to - it moves it in line with the standard of living. In any case, this announcement is welcomed by Austax.

Increase in retirement age to 67

For older australians aiming for a pension in 2017, the retirement age has been increased by 2 years. Thus, it will have go up from 65 to 67. This will be increased progressively over a 6 year period, and this new age limit will take place in 2023. The motivation behind this, is that people are working for longer, higher life expectancy and this will help fund the economy. 

We're not in favour of this announcement. The retirement age has been at 65 for 100 years, and now its increased for the first time to 67. On the one hand, the government has increased the pension and then they are telling people to work longer for it. Anyone in their mid 40's will have to work an additional 2 years to recieve the pension. We understand that people are working for longer and there is a higher life expectancy, however the government is putting a burden on our older Australians. We do not believe the retirement age should have been increased. 

Joe Hockey, the Shadow Treasurer had this to say:

"Raising retirement age by two years to 67 by 2023 was another poor initiative.

"When they promise to do things in 2023 that just shows you they are incapable of making the hard decisions to keep the economy on track," he said.

But Mr Hockey praised the government's decision to spend $14.2 billion over five years to lift the pensions of more than three million Australians and its measures to tackle the medical skills shortage."

Wayne Swan has acknowledged that this will be an unpopular move.  

Higher Income Pensioners

Pensioners on higher incomes will be disadvantaged as the Government will cut the pension by 50 cents for every dollar over the income threshold of $138 per week for singles and $240 per week for a couple. It is essentially a redistribution of income, from higher income pensioners to lower income pensioners.

Carer payments to increase

One of the announcements were were quite happy to see is that Carers get a bonus. There is a new $600 a year Carer Supplement, plus extra $600 a year allowance for each person in their care. We believe this a positive annoucement as often these people are our "unsung heroes" and sacrifice much of their time and other opportunities to take care of our elderly, the sick and other members of society. This is estimated to have a total cost of $1.8 billion over five years.

From the AusTax team. 

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