Written

For

The

Australian

-

The

little-known

trick

to

boost

your

age

pension

entitlements

Would you deliberately sell your $1 million home and upgrade to a $1.45 million one just to qualify for the age pension? It sounds counterintuitive, but under our current rules, it can actually work — and it's perfectly legal.

Here's the quirk in our system. The family home is exempt from Centrelink's assets test, regardless of whether it's worth $500,000 or $5 million. There's no upper limit. Meanwhile, renters get no equivalent exemption, and homeowners already enjoy a capital gains tax-free ride when they sell their principal residence. It's a significant leg up.

Take a single retiree with a $1 million home, $800,000 in super, a car and $30,000 in the bank. Their $850,000 in assessable assets rules them out of any pension. But if they sell up, buy a $1.45 million home and draw down super to fund the difference, their assessable assets drop to $295,000 — and they qualify for the full age pension of $30,646 per year, plus the pension concession card, which can be worth thousands.

The math is surprising. Yes, their super drawdown drops from $56,000 to around $17,150 per year, but the guaranteed, inflation-linked age pension largely fills the gap. The income shortfall is only about $8,000 — and shrinks further once concessions are factored in.

Another lever is gifting. You can gift $10,000 per year (capped at $30,000 over five years) without penalty. Gift earlier — before age 62 — and the five-year "deprived asset" clock runs out before you apply for the pension at 67.

But here's my caution. Chasing the pension "at any cost" can leave you dangerously exposed. Unplanned medical bills, aged care costs or a major home repair could cripple you if you've drained your liquid assets to inflate your home value. The age pension is a safety net, not a strategy to build a retirement around blindly.