Grey nomads and the age pension

There's something very alluring about exploring Australia in a campervan. A sense of adventure and freedom you won't find elsewhere. From the mountains and the oceans to the great outback, it's hard to appreciate the scale of the country until you see it from behind the wheels of a mobile home.

Plenty of Australians agree. 30,000 to 40,000 'Grey Nomads' travel around Australia each quarter. With international travel appearing limited for the near future, we can expect those numbers to increase.

But what are the Age Pension implications of hitting the open road, and how does Centrelink assess your payments when you're away from home? Let's find out. 

What is the asset and income test for the Age Pension?

Before we start talking travel, campervans, and Centrelink, it's worth taking a moment to recap how the Age Pension is assessed.

In short, your assets and income will be used to determine if you qualify for a full or part-pension.

While the family home isn't included in the asset test, the following items are:

  • investment properties
  • caravans, cars and boats
  • superannuation and account-based pensions 
  • business assets.

The table below shows the maximum permitted value of these assets before your pension payments are reduced:

Asset Test thresholds

  Homeowner Not A Homeowner
Single $270,500  $487,000 
A couple (combined) $405,000  $621,500 
A couple (one partner eligible) $405,000  $621,500 

 Source: Services Australia 

For every $1,000 in assets above these limits your pension payments will reduce by $3 a fortnight, this is known as the 'taper rate'. You can learn more via the government's website.

Any income you receive, whether from part-time work or investments, will also be looked at when assessing your Age Pension eligibility. Centrelink will use the higher value of the two – income or asset test – in determining your payments.

The rules around income and the Age Pension can get quite technical, so you may want to consult a financial planner about your specific circumstances.

Travel, the Age Pension, and your primary place of residence

Traveling around the country doesn't generally impact your Age Pension eligibility. But there are a few things to be mindful of. Most importantly - maintaining your primary place of residence.

Assuming you own a home, it will continue to be classified as your primary place of residence (and exempt from the asset tests) even if you're on the road. 

But there are limits. If you spend more than 12 months away from home and travelling, Centrelink may decide that your mobile home is your primary residence. This can have a significant impact on your asset test and your Age Pension payments.

In other words, your home may be reclassified and included in your asset test. This may see your payments reduced or even stopped.

If you want to avoid the above scenario, you'll need to spend some time in your primary home each year. This is easier if you break your travels up into a number of smaller adventures. 

Rental income when you're travelling

If you're going on the road for an extended period of time, you can potentially sub-let your home. This can be a nice little earner and means someone is there to look after the place and make sure the plants are watered.

Assuming you adhere to the 12-month rule mentioned above and spend some time at home, the only issue here is income.

This scenario will be unique to each person, so it's best to speak with your accountant or financial planner to understand how any additional income may impact your overall financial position, and any Age Pension payments.  

Rental assistance income and travel

If you don't own a home the rules are a little different, and you may qualify for rental assistance, even if your main residence is a caravan, relocatable home, or a boat (as long as you're paying site fees).

There's a minimum amount of rent you need to pay each fortnight in order to receive rent assistance. But Centrelink doesn't differentiate between renting a house or apartment vs site rental fees while you travel.

Let's recap

Australia's Grey Nomads are on the move. NRMA reports that in the last decade we've seen a 90% increase in the number of retirees spending part of the year travelling around the country.

That number is likely to continue to rise while international travel is restricted, and people look at alternative holiday options.

If you receive a full or part Age Pension and decide to travel around Australia, your payments shouldn't be impacted. But there are a number of things to keep in mind, mostly related to the family home and any income you might receive from sub-letting it.

So, if you're new to the Grey Nomad lifestyle, or just want to try it out, consider short trips and rented vehicles. If you are planning a more permanent life on the road, make sure you speak with your accountant or a financial planner to avoid an unpleasant surprise from Centrelink and the tax office.

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