I retired from work, when should I apply for Age Pension

I do get lots of questions from readers of my weekly newsletter or people who watch my YouTube channel. And often questions are repeated, therefore I can see very clearly what is a common misunderstanding of rules, when it is difficult to find the information or proper explanation, or information on the subject is just simply non-existent anywhere. 

One such question that I keep receiving and keep getting asked even during private meetings is the question from Masa:

Hi Katherine, I wish I had come to your video much earlier. My question is when to apply for pension. If I finish working in December, my income for that financial year would be too high. Should I wait till next financial year to apply? Thanks for your advice in advance.

So today I will try to answer that very question: when should you apply for Age Pension if you completed your work in the middle of the year and your income is above the limit for the Income Test? 

Ok, so I wanted first to do a small exercise and decided to google the question about when to apply for Age Pension if retired from work in the middle of the year. 

Obviously I got many pages with smart information about age limits, the information that you are allowed to apply 13 weeks prior to reaching your Age Pension age, how to prepare to make a claim, information about working while on Age Pension, but no help with our question. 

There is no such information available on Centrelink site, nothing on Moneysmart government site, nothing on all super funds’ sites.

No wonder I am receiving this question so often, there is no place to find the information with such detail. So, I am glad to say Masa, that I am able to provide you and everyone reading here, with a detailed answer.

The fact that you earned more that the Income Test allows, because you were working for part of the year, has no bearing on the outcome of your Age Pension application. 

This is one time, when Centrelink is looking only at your situation at the time of your application and not your past. 

This is because Centrelink is working on the basis of the fortnightly earned income and not full financial year. Unlike ATO, Centrelink is not interested how much money you’ve earned for the year, only what is your income in the fortnight you are being assessed. 

If you’ve just completed your employment, please organise with your employer the letter confirming your retirement. 

Therefore, when completing your Age Pension application, you will be required to provide the date of your retirement from your work, confirm it by providing the letter I’ve just mentioned and list all your assets values as they are on the day of your application. 

All your income surplus has accumulated in your bank account. If you received any long service leave, all of it will be deposited to your bank account and Centrelink will count it under the Assets Test, as your cash balance when applying. 

Normally I do encourage people to apply 13 weeks prior to reaching Age Pension age, but this is a good advice for those who do not work at the time, or only work part time, and are still eligible for Age Pension under the Income Test with that work income being taken into account. 

If you know that your employment income is above the Income Test limit, then there is no point applying 13 weeks prior, or any time prior to your actual eligibility under both Income and Assets tests. And please make sure you get a proper advice how to set up your savings to maximise your Age Pension before you make your application if this is still possible. 

Maximising Age Pension should be a very high goal for every single person either approaching retirement or already retired. This is most certainly one of the best strategies to make your own savings stretch further and your money last so much longer.

So to confirm, Masa, do not apply for Age Pension while working. Once completed your employment, please organise the said letter from your employer, collect all your entitlements, get proper advice so you know in advance how much of Age Pension you will be receiving. If you are not eligible for full Age Pension please organise a meeting with a Certify Financial Planner that specialises in retirement and Age Pension rules, you can obviously contact our office either by calling 1300 274 731 or boking a meeting directly on website

And then you are ready to complete your application with the knowledge that you will be receiving the highest Age Pension you can in your situation and with your level of assets, not to mention that hopefully all your assets will be maximised to provide you with an adequate income for your retirement and you will know exactly what, how and when you can spend your money and how long it will last for you. I think this is a very good plan. 

By: Katherine Isbrandt CFP®
Money Strategist & Retirement Planner
Principal of About Retirement