Australia. Self-funded retirees could earn less than age pension
Labor’s policy to end cash refunds for franking credits is a contentious topic – and for good reason. It’s a policy that could reduce some retirees’ incomes by up to a third.
Consider retirees Alan and Bev, both in their 80s. They have a modest home worth $400,000, a 10-year-old car, a caravan and a small amount of cash that they hold for emergencies. They have built up a nest egg of about $800,000 in a share portfolio they hold jointly.
Their assets are too high for them to receive an age pension, so they live off the dividends from the share portfolio of $32,000 a year, and a refund they receive from excess franking credits of $13,000. Their total income is $45,000 a year.
According to the Association of Superannuation Funds of Australia, the required annual income for a modest retirement is $39,775 and a comfortable retirement requires $60,977.
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