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Australians do not have to work until they are 70 years old before they can retire!

Written on the 9 January 2015 by James Cagney

One of the main things in last year's 2014 Federal Budget is what the government regards as the biggest risk to balancing the budget -  the aged pension cost.. Whether a person receives the age pension, and how much of the age pension they receive, depends on three tests being passed. The first is the 'Age test', the second is the 'Assets test', and the last is the 'Income test'. If the age test is not passed there is no entitlement to the age pension.

Currently for those born before July 1, 1952, the age test is 65. This then increases in half-yearly increments to sixty seven (67 years) for those born after January 1, 1957. Under the budget measure, people born between July 1, 1958 and December 31, 1959 will have a qualifying age of sixty seven and a half (67.5 years). The qualifying age will then increase to 70 for everyone born after January 1, 1966." (ref. Max Newnham The Age 12th June 2014)

In short, the Government is broke and they have no option but to reign in the largest expenditure in the budget i.e. the age pension!  I believe the next move of the Government will be to conveniently freeze the asset base you may have before you are eligible to get a full pension. Therefore the amount you have in excess of this base amount reduces your pension payment as you only qualify for part payment. This means that normal inflation and capital growth in your investment property  is not taken into account which will save the Government billions of dollars in pension payments. At this stage your own home is not included in the Asset test but do not be surprised if they do this in the future. As more and more young people become renters, which is the trend today, they become more verbal about the rich having it all and this will jusitfy the government in including our homes in the Asset test. The "Entitlement Generation" will then get their way because the Government can't afford to support the ever increasing older population in Australia.

Pensioners will just keep getting poorer and poorer. This is unfair after you have worked forty years (soon to be increased to fifty years) of our life before you can get something back for all the tax dollars you have given the Government. 

The LNP Coalition government tried to collect new revenue and decrease the public sector spending to help balance the budget but their efforts are being hampered by looming State elections. Victoria's move to Labour in 2014 mostly due to the doom and gloom of the 2014 budget. Queensland is having an election on the 31st January 2015 and the Newman government is desperately trying to convince the electorate that the cuts they have made over the past three years were  necessary. Not easy when people have lost their jobs and unemployment in Queensland is  the highest in the country  Labour will once again promise to spend more and more create jobs. The LHP attempts to justify it was necessary to cut expenditure to balance the Budget will fall on deaf ears and Labour have a good chance of winning more seats. People have short memories and they have forgotten how the previous Labour government in Queensland drove the State close to bankruptcy . It is the "Same old same old" with Labour Governments spending the money and the LNP having to pull in the reigns.

One of the reasons that China has had exceptional economic growth over the past decade is that they have a long term economic strategy". The State and Federal governments in Australia only have a tthree to four years economic strategy i.e. between elections. Both have to appease the voters by giving away the farm or they will lose the election and their jobs. What do the politicians always do - put Australia's interest  first or put their political future and their family first?  Hard choice to make!

So what can you do? You must invest to prepare for your own future. Do not rely on the Government, your company, your boss, your family and friends. What we have to say to ourselves every day is " IF IT IS TO BE, IT IS UP TO ME". It is up to ourselves to provide for our future. Nobody else is going to do it for us. It is much better to retire with LIFESTYLE & DIGNITY,  than to be BROKE & ASHAMED living off the charity of the government, family and friends.

 If you live 20 years in retirement you have 174,720 hours on your hands in retirement to live comfortably or to agonize over every dollar you have to spend. What do you want - it is your choice. Take action TODAY by going to our website and spend the time to plan for your future.  After all one hour of your time now is only be 0.00006% of your time in retirement. I think that this is time worth spent.  Click HERE to find out how you can take control of your future.


This is not financial advice. You should not act solely on the basis of the material contained in this article. Changes in legislation occur frequently and without prior notice. Property Cycles are subject to frequent change so items herein are general comments only and do not constitute or convey advice PER SE.

  IRPS Associates Pty Ltd,  P O Box 838, Helensvale, Qld 4212.
  Tel: +61 7 5502 7788     Fax: +61 7 5657 7094    Site: www.jamescagney.com.au     Email: james@irps.com.au

Author: James Cagney
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