Budget 2024: what really matters for those approaching and in retirement
Prime Timers and Epic Retirees got a few wins in the budget overnight. It's worth taking a look through the list. And, I also talk openly on the furore about cash being dead.
In this week’s edition:
From Bec’s Desk: A big can of worms and a lot of letters
Feature story: Budget 2024: what really matters for those approaching and in retirement
Prime Time: The BIG retirement mistakes people make and how to avoid making them
The Course Countdown: It’s on…
First, a big thanks! How to Have an Epic Retirement, the book, hit #10 on the Amazon bestseller list this week! Number Ten! We didn’t even get that high in the first weeks of book sales. I’m excited. Normally retirement books are hidden at the back of the store on the bottom shelf. Not this one. 🏝️ Thanks for telling your friends. That’s clearly how a book gets this far ten months after publishing. 🥰
In case you haven’t got a copy yet - you can buy How to Have an Epic Retirement, the book on Amazon and Booktopia and in many of the major bookstores. It did sell out in a few places this week - but more is on its way!
Cash is still dying… even if you’re angry about it.
No doubt you saw the giant can of worms I opened with my very well-meaning and factually correct article on Sunday in The Age and The Sydney Morning Herald. I used my column to encourage retirees to learn about and use online banking and digital wallets before cash becomes obsolete in about 7 years time.
I GOT SMASHED with feedback.
Even the Daily Mail wrote an article about the extraordinary furore my article caused! “Woman sparks outrage after claiming cash is already dead”. 😵
Yep! Hard core smashed. My inbox resembles everyone’s worst nightmare, but they’re raising legitemate concerns. So I won’t leave you out of the story. Here’s some insights into the feedback and some reasonable questions they raise for me and for others.
Are bank fees for transactions evil? Or are they paying your dividends?
Many don’t want to pay fees to banks. I don’t like paying fees either. But that doesn’t mean I won’t learn how to use a system and use it when it suits me. I personally recognise that I used to pay retailers a margin that included their handling, banking and processing of cash. Now, I probably don’t pay that to retailers as they bank my money at the time of payment without having to count tills, drive to the bank and such. And banks are not going to provide that service for free, no matter how loud people cry. So, if I want the convenience, and the business wants the efficiency, there will be a cost. Either the retailer pays it and hides it in your margin. Or you pay it. It’s a bit like postage on an online purchase.
A little aside, but a worthy thought - How many of you have bank shares that pay you dividends, or have a holding in a bank via a major super fund? Surely many are benefitting from the banks earning money too? Retirees are some of the largest holders of bank shares after all. And banks are some of the biggest payers of dividends. It’s a circular world we live in.
Some have loves ones who simply can’t cope with the technology.
This is awful and I have deep empathy. Cash will probably be around a while still, and while it is, I hope someone finds ways to limit digital technology so they dont get scammed and can use it in a simple manner. Maybe some clever entrepreneur or social enterprise can come up with a limited account that can have capped risk and supervision. Some banks already offer accounts with a second account holder in a supervisory function for dementia sufferers. It might be worth asking your bank. Some have dedicated teams for dementia and disability support too.
Scammers and fraud
Cyber crime sucks. I agree with all of you. So when we teach people how to use digital technology, we also have to teach them what to look out for. There’s nothing we can do here but teach, and reinforce and teach again I don’t think.
Connectivity issues
This is an argument I get. When there’s no internet - there can be no internet banking. So it can’t happen until internet coverage improves and we have options. But this is improving over time. Sure, in regional Australia it sounds like we might be able to hold off the death of cash simply because of the delays to connectivity. But that can only happen if we can find trucks to deliver cash and ATM owners and supermarkets that want to provide it! Let’s be realistic, the concerns about Armaguard going into administration in March and April of this year are real. Moving cash around this country is expensive and noone is putting their hand up to lose money doing it - so that’s a watching space.
“I don’t wanna”
That is frankly your choice. This issue may well be a silent one. No politician or bank is going to take a public stance and rally the end of cash, because it’s a politicians worst nightmare to anger older Australians in the prelude to an election. It’s my suspicion that they will just let it disappear organically. And the losers will be those who don’t want to learn. It’s a tough message to hear. But, just like with retirement, you have to learn to become wise. I want you to be wise and capable.
Issues with charities and kids
I have had a lot of letters about the death of donations and the disaster of children’s financial literacy. There is alternatives here, and the organisations that embrace digital tools can find them. I went to an Australian Independent Retirees event the other day who sold their raffle tickets using a square reader that takes digital payments. Anyone who wanted to pay with digital funds could and did. Similarly at charity auctions, they provide a QR code and people bid with ease. At my son’s school the whole tuckshop and uniform shop has been digitised with amazing tools that integrate parent approvals into spending. Its happening, and I know it’s not the world I grew up in where I did learn by counting coins, taking them to the teller and having my bank book stamped, but they can’t do that anymore anyway. So let’s teach them in the language of the world they will live in. Change sucks sometimes, but Boomers have been the masters of it so I have faith you’ll get there.
Ultimately though, I can’t change the trajectory. I can only point to it and educate. And I’m still pointing to the death of cash in LESS THAN seven years. So, if I managed to reach a whole lot of older Australians and got them to start to consider the reality that they will need to learn about digital transacting, then I’m kicking the goals I aimed for. What my article didn’t say because I only get 800 words of printed column space to play with, is that if you choose only to use digital transacting for some things, because you don’t like paying bank fees - then that’s perfectly ok too. My rallying call is to encourage people to learn and become capable and confident in digital transacting. Then you have the CHOICE.
I know most of you here actually know how to use digital technology, but you might not yet have leapt into digital wallets. So, I’ll point you back to the Sydney Morning Herald article to read my three steps.
Start with web-based online banking
Next, learn to use your bank’s mobile app
Then, start using the digital wallet on your devices
Always know I mean to look after your best interests. I’m just one annoying, opinionated person who is really on ‘team retiree’!
The upcoming Epic Retirement 6 week course
The early bird discount on the How to Have an Epic Retirement Flagship Course closes on the 27th May. So it’s time to get your bookings locked in. Book for Winter here. Or, simply find out more on the website here.
I released the first video of the course, free
I thought it might be nice for you to watch the first, foundational lesson of the How to Have an Epic Retirement Flagship Course, so I released it for free yesterday. The video teaches you the six pillars of an epic retirement. Watch it here.
Until next week! Make it epic!
Many thanks! Bec Wilson
Author, podcast host, columnist, retirement educator, and guest speaker
Budget 2024: what really matters for those approaching and in retirement
The winners are, pretty much anyone who still pays tax - which is our pre-retirees - who will get a handsome stage 3 tax cut. Another smaller win will be felt by anyone living in a home paying an electricity bill as they get a $300 rebate on electricity costs.
Pensioners will get a couple of wins. The first is that the cost of medicines at $7.70 for 60 days under the PBS will not go up for five years. The second, if they pay rent, is through another 10% increase to the Commonwealth Rent Assistance program.
And the freeze in the deeming rate on financial assets for the Age Pension income test is another little win, but won’t affect too many people.
But let’s take a deeper look at the budget for Prime Timers and Epic Retirees!
A freeze on Pharmaceutical Benefits Scheme prices
There will be a freeze on the price of medicines under the PBS for people over the medicare safety net for 1 year. And, for age pensioners for FIVE years. Those who are eligible can get 60 days of medicines for $7.70 under the PBS.
Chalmers said in the telecast that this would mean “no pensioner or concession cardholder will pay more than $7.70 for the medicine they need”.
The Medicare Levy thresholds have gone up
The low-income thresholds for the medicare levy have increased. This is helping them to keep up with inflation basically, so it’s not a big move.
For single seniors and pensioners, the threshold has increased from $38,365 to $41,089
The family threshold for seniors and pensioners has increased from $53,406 to $57,198
Cost of living electricity rebate
A $300 cash rebate for every household provided as a reduction to power bills. This is not means tested. Every Australian household will qualify. This will come on top of the rebates offered by the state governments in QLD and WA.
Stage 3 tax cuts for workers arrive 1 July
The stage 3 tax cuts have arrived. These were announced earlier this year. For those in the highest tax bracket, these tax cuts will result in annual savings of $4,529. On average, taxpayers will save $1,888 each year. If you’re approaching retirement this little windfall could be used to lift your super balance.
A 10% bump to Commonwealth Rent Assistance
We know renters are really feeling pain. So a 10% increase in the Commonwealth Rent Assistance payments will be well-received. This comes in addition to the 15 per cent announced last September. Every dollar helps.
Carer payments change
Starting March 20, 2025, there's a small change happening for people who receive Carer Payment.
Before, they were allowed to spend up to 25 hours per week on certain activities like work, study, volunteering, and travel combined. Now, they can spend up to 100 hours over four weeks, but this limit only applies to work, not study, volunteering, or travel.
If someone goes over this limit or uses up all their temporary breaks from caring duties, their payments will be stopped for up to six months instead of being completely cancelled. They can also use single-day breaks instead of having to take at least a whole week off if they go over the limit.
So, it's a change in the rules to give carers a bit more flexibility without losing their payments entirely.
A freeze on deeming rates for the Age Pension and Commonwealth Seniors Health Card income test
The government has frozen deeming rates for one more year.
Deeming rates are the rates used on your financial assets to calculate your income for the Age Pension income test. This is the test that applies for the Commonwealth Seniors Health Card too. The government has extended a freeze that was already in place since 2022 when both political parties agreed to freeze them in the lead up to the federal election.
This will only affect people who are over age-pension age, and who rely on the income test for their qualification for the test (not as many as are affected by the Assets test).
Help for ageing in place
There’s 24,000 new home care packages to be made available under the budget for FY 24-25, something I am sure will be sucked up by the extraordinary waiting list for care in the home.
There’s also increased funding to support older Australians recover from a hospital stay with short term in-home care offered through an extension of $190M to the Transitional Care Program. Many don’t even realise this exists until they need help after surgery or a fall.
Increased investment in aged care
There’s more than $2 billion of commitments to improve our Aged Care system, supporting the reforms of the sector and a sprinkling of money to support regional and rural staff, which cannot come quickly enough. Not much we can reach out and touch now though - just lots of commitments.
Change to Jobseeker
Starting on September 20, 2024, there will be adjustments to who qualifies for the higher rate of JobSeeker payment if they can only work a little bit each week, from zero to 14 hours.
Currently, this higher rate ($55 higher) is given to two groups: single recipients with children they support, and people aged 55 or older who have been receiving the payment continuously for nine months or more.
With the changes, eligibility for this higher rate will be expanded to include single recipients who can only work a small number of hours per week, regardless of whether they have children or their age. This means more people with limited work capacity will receive the higher rate of JobSeeker payment.
Housing crisis help
There’s three commitments on the list to help us all with the housing crisis:
The government plans to allocate $423 million over five years to assist states and territories in constructing additional social housing units and improving homelessness services. This funding aims to address housing shortages and support those in need of stable housing.
Additionally, the government is providing an extra $1 billion to states and territories to enhance housing availability in areas that are well-situated. This funding aims to encourage the development of housing in convenient locations where people can access essential services and employment opportunities easily.
Furthermore, there will be $1.9 billion in loans offered to support the construction of 40,000 social and affordable homes. These loans aim to facilitate the building of homes that are within the financial reach of low to moderate-income individuals and families, helping to alleviate housing affordability challenges.
Some other interesting ones:
Menopause education for professionals - There's $1 million over two years to support health workers who enrol for a Professional Development course called Managing Menopause.
Sweet potato levy! - If you're a fan of sweet potatoes, you might end up saving some money at the grocery store soon. The government has decided to adjust the agricultural levy and charge on sweet potatoes. They're reducing the overall levy rate from 1.5% to 0.5%. The levy is a small fee that sweet potato growers pay based on their sales. By lowering this fee, growers might have more money left over. If they decide to pass these savings on to consumers, it could lead to lower prices for sweet potatoes at the supermarket.
Bulk billing timeframes cut - Patients will now only have one year to lodge a Medicare bulk bill claim. Before, patients had two years to submit a claim for Medicare bulk billing. Now, they'll only have one year.
Why the change? The government believes that by shortening the time frame, they can respond more swiftly to any cases of fraud or non-compliance in the Medicare system. Essentially, they're aiming to catch any irregularities sooner, which could help prevent misuse of Medicare funds.
Women and the myriad of womens’ issues in our country
There’s a long list of actions to secure womens’ safety and financial futures which makes for great reading. My favourites:
$1.1 billion has been allocated to pay superannuation on paid parental leave.
A $925.2 million Leaving Violence Program to support a program for five years starting from July 1, 2025, to help survivors, and their children, flee domestic violence. It offers up to $5000 of financial support, which will be indexed each year to match inflation. It’ll be available to all, including migrants regardless of their visa status.
$1 billion, under the $11.3 billion housing package, will fund urgent crisis and transitional housing for those fleeing domestic violence.
The BIG retirement mistakes people make and how to avoid making them
Our Prime Time podcast this week was said by many in our Epic Retirement Club Facebook group to be “our best yet”.
In this episode I chat with Peter "Grubby" Stubbs, radio veteran and a huge advocate for getting the most out of life. Together, we're looking at the biggest mistakes people make in the lead up to retirement, breaking down everything from when to start planning, finding your passions and why underestimating the value of work could result in retiring too early.
From the rookie errors to the nitty gritty financial stuff, this episode is packed with practical advice and insights that will help prevent you from making any of these common mistakes.
Also joining me is Jacki Ellis, CFA and Head of Retirement at Aware Super, proud sponsors of Prime Time to help us unpack in a really fun way the truths and mistruths about our superannuation.