Retirement
Every $1,000 over the line costs you $78 a year of Age Pension
Above the free area, the assets test takes $3.00 a fortnight for every $1,000 — $78 a year. That is a 7.8% hurdle rate on money that is very unlikely to be earning it.
The taper is a return you are being asked to beat. Almost nothing beats it.
Above the assets free area, every extra $1,000 of assessable assets reduces the Age Pension by $3.00 a fortnight — $78 a year. Put another way, the last dollars of assessable assets have to earn 7.8% after tax simply to break even against the pension they are costing you. Term deposits do not do that. Most conservative portfolios held by people in their seventies do not do that.
Which means the assets test is not a threshold to be sad about. It is a rate of return to be measured against — and the moment you look at it that way, a whole set of ordinary, lawful, entirely unremarkable decisions (prepaying a funeral, renovating the home, timing a gift, which spouse holds what) turn out to have a price attached that nobody quoted.
A single homeowner keeps the full pension up to $333,000 and loses it entirely at $733,300. A homeowning couple: $499,000 and $1,102,467.
Between those two numbers is a band where every financial decision has a second price.
What it works out
- Both tests, not the one you assumed. The assets test and the income test are run separately and the lower result is what you are paid. Plenty of people optimising the wrong test get nowhere.
- Deeming, properly. Financial assets are deemed at 1.25% and 3.25% rather than at what they actually earn, which is why the income test result is so often a surprise.
- The Work Bonus, the free areas and the homeowner distinction. The gap between the homeowner and non-homeowner free areas is large enough to change the whole answer.
- Gifting, with the break-even. A gift reduces assessable assets subject to the rules, and it takes roughly 12.8 years of extra pension to recover the money given away. That number is the whole gifting decision.
- Every lawful way back under the line, ranked on one measure: pension received over the projection plus what the household still owns at the end. Both halves, because reducing assessable assets by spending them is not a win.
What the full report adds
- The projection, not the snapshot. Thresholds index and deeming rates change; a plan that works this fortnight and not in three years is not a plan.
- Every option priced against every other, including doing nothing, which is sometimes the correct answer and is rarely presented as an option.
- The couple dimension. How a couple is assessed, what changes when one partner enters care, and what happens on the death of the first.
- Something to take to Centrelink or an adviser, with every working visible, so the conversation starts from the arithmetic rather than from a claim.
What it will not do
It does not give financial advice and does not recommend a strategy. It applies the published rates and thresholds to the figures you enter and ranks the lawful options on one stated arithmetic measure. What suits your circumstances, your health and your family is a question for a licensed adviser or a Services Australia Financial Information Service officer — both of whom work better with the numbers already in front of them.
Your actual entitlement is determined by Services Australia on the information you give them. Everything here runs on the rates current at 20 March 2026.
What people ask before they run it
How much does the Age Pension assets test reduce my pension?
$3.00 a fortnight for every $1,000 of assessable assets above the free area — $78 a year, which is 7.8% of that $1,000. A couple who own their home have a free area of $499,000; a single homeowner $333,000. So a couple $200,000 above the line lose $15,600 of pension a year, every year.
Is the 7.8% figure really the return my savings have to beat?
It is the return they have to beat to replace the pension income they are costing, which is a different statement from the one about your capital. $78 a year on $1,000 is 7.8% after fees and after tax, and almost no portfolio produces that reliably. The capital is still yours, which is why giving money away is a slower answer than moving it somewhere the assets test does not count — the report prices both.
Can I give money away to increase my Age Pension?
Within limits, and it is treated as a gift only up to them: $10,000 in a financial year and no more than $30,000 across any five. Anything above that is still counted as your asset, and still deemed, for five years from the day you give it. A gift inside the limits raises the pension by $78 a year for every $1,000 — so it takes about 12.8 years before the extra pension has replaced the money you gave away.
We are a couple but one of us is in aged care. Are we still paid the couple rate?
No, and it is worth asking about. A couple who have to live apart because one of them needs residential or nursing care are treated as separated by illness: assessed on the couple thresholds against everything the two of you own, and then paid at the single rate each. Combined that is $62,447 a year rather than $47,070, and the assets cut-off moves out with it. It is not applied automatically — Services Australia has to be told why you are living apart.
Does Rent Assistance count towards the Age Pension tests?
It is part of what the tests reduce, rather than a payment sitting beside them. Rent Assistance is 75 cents for every dollar of rent above $154.80 a fortnight for a single person or $250.80 for a couple, capped at $219.40 and $206.80, and it is added to the basic rate and the supplements to make your maximum payment rate. The income and assets tests then reduce that whole total, which is why your cut-off point is higher if you receive it.
Do you give financial advice?
No. This is an information service: it applies the published social security rules to the figures you enter and shows what they produce, with every working visible. It ranks options on one stated arithmetic measure and does not recommend one. Whether an arrangement suits you, and what it would cost you in ways a number cannot see, are not in that measure.
Why does the report cost this when an adviser charges thousands?
Because the arithmetic is the part most households are missing, and arithmetic scales. A licensed adviser typically charges from $3,500 for a statement of advice, which includes a personal recommendation this service is not licensed to make and does not attempt.
Everything on Pension Optimiser
The estimate is free, and it is a real one.
Calculates the Australian Age Pension under both the assets test and the income test on your own figures — deeming, the Work Bonus, the homeowner and non-homeowner free areas, gifting and the exemptions — then prices every lawful way of reducing assessable assets and ranks them on one measure: pension received over the projection plus what the household still owns at the end.
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