Ask Paul: If I work three days, can my husband get a part-pension?

Q. My husband is 64 and I am 54.

I work full time, earning $80,000, and my husband is self-employed, working one day a week, and has investments earning $12,000 before tax.

Because of our 10-year age gap I would like to figure out how I can retire earlier or work fewer hours. I have two months' long service leave which I can take on half pay to allow us four months' travel while we are still healthy.

In super we have $293,000 (mine) and $54,000 (his). Our investments, which total $120,000, are in his name. We own a home worth $1.2 million and have solar with no electricity bill. We live on $51,000pa net and have no debts.

If I go to three days a week, my income will be $54,000. Will my husband be able to get a part pension? Is there any way to reduce my hours and stay in our home? - Maris

A. Interesting question, Maris. I turn 64 this year, so I really understand your wish to travel and get on with life. We humans have never lived as long, or generally been as healthy, so I hope both your husband and I have many years to go. But you never know!

The age pension for a couple is based on their income and assets, so despite your valuable home being an exempt asset your combined income will be subject to the income test. More fundamentally, he has to be 65 to qualify for a pension. Once your income reduces and you husband is 65 or over, I would talk to Centrelink or your adviser.

Most of your assets are in your home.

The idea of using your four months of long service leave at half pay to travel does make a lot of sense.

Life is uncertain and travelling while you can is a great plan. But beyond this, if your income drops to $54,000 and your husband keeps earning $12,000, then after tax you will not have a lot more than the $51,000 you need to live on, with no travel budget bar what you get from your investments.

I feel that the $120,000 invested, plus your super totalling some $350,000, should be preserved for your retirement.

I suspect you may be better staying in your full-time job for now and using some of the long service leave to travel. But what you really need is a long-term financial plan. This would set out a strategy, including age pension eligibility, for the next couple of decades.

A big issue will be the retention (or not) of your home.

Your super fund may well have such a service but I know you would benefit from a lengthy discussion with a fee-charging adviser and a detailed analysis to best use your resources to live the life you want.

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