I’m 59 and my wife is 68. I work full-time and my wife works part-time. We are looking at gifting our son $500,000 after the sale of our house. We presume this gift excludes us both from receiving any pension for five years. Are we correct in thinking that after five years the $500,000 has no impact on our pension asset test?
As to whether that rules your wife out of eligibility for the age pension depends on your other assets and income. You are not eligible until 67 years of age, so the gift would have no impact for you, only your wife. Early inheritances are great and to be encouraged when it is clear a retiree has wealth comfortably exceeding their needs, but if you are on the cusp of age pension eligibility, that would suggest your savings are more in line with what is needed for a comfortable retirement, rather than excessive. Please consider carefully whether a gift of this magnitude, at this point in life, is prudent.
A great question. Most commonly I would suggest converting your accumulation account to a pension as your returns will be a little better due to the removal of the earnings tax. You are right, however, to identify the drawback, which is that you will then be required to draw down 5 per cent of the balance each year, increasing as you get older.
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