Ask the Expert: Is it worth still working if you can get the age pension?
How to calculate if it is still worth it – financially, at least – to work beyond the age when you can get the age pension.
Question 1
Is it still worth working past age pension age, or will I just lose my age pension? I’m nearly 67, own my own home and am single. I have a small amount in super (around 100K) but not much else. Weighing up what to do.
There may be good social and physiological reasons to keep working but let’s look at the financial one.
If you were to stop work, given your situation, you would be eligible for the full age pension of $30,646 per year ($1178.70 per fortnight – including supplements).
You could also start a pension from your super to top up your income.
If you were to continue to work, then you would end up with a higher income.
For single age pensioners, the first $218 per fortnight does not affect your age pension payments; this is what is called the “income free area”. Each dollar of income above $218 reduces the rate of the age pension payment by 50 cents for singles.
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Additionally, to encourage older Australians to continue working, there is a “work bonus”. Under this, the first $300 of employment income is excluded from the income test.
Sometimes it’s easier to look at an example. Say you continue to do some part-time work and earn $1000 per fortnight – let’s compare that to you stopping work altogether.
Under the no-work option:
- You receive the full age pension of $30,646 per year and pay no tax.
- You can convert your super to a pension and start to draw down your money to top up your income. Super is tax-free and, given your modest balance, it won’t affect your age pension.
Under the part-time work option:
- You receive $26,000 in salary per year.
- Your age pension drops to around $23,650 per year.
- You pay tax of approximately $5700.
- Your net (after tax) income is $43,950.
- Your net (after tax) income is $13,304 higher by working.
- You still have the option of starting a pension from super now or waiting until you fully retire.
- Your employer will pay SG (super guarantee) contributions into your super at a rate of 12 per cent of your salary ($3120 per year in this example).
Question 2
What are the tax and rules around moving into a positively geared investment property that was bought 25 years ago? I own my home of 45 years and can’t decide whether to sell it or rent it out? Thank you for your articles – they are always interesting.
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If you moved into your rental property, your eligibility for a main residence exemption is limited to the period you lived in the property. For the period the property was rented out, you will be liable for CGT when you sell it. This assumes you sell your current main residence. For tax purposes, you can only have one main residence at a time.
Use the following formula to work out your CGT when you sell your property:
Capital gain or loss × (number of days the property was used to produce income ÷ total number of days you owned the property).
The ATO provides the following example:
Farnaz entered into a contract to purchase a property on October 21, 2018, for $449,000. She immediately rented out the property.
The property was rented for two years, until Farnaz moved into it on November 16, 2020. She lived in the property as her main residence until she signed a contract to sell her home on April 1, 2025, for $987,500.
Farnaz works out her net capital gain as follows:
- Capital gain is $538,500 (worked out as $987,500 − $449,000).
- Number of days owned is 2355.
- Number of days the property was used to produce income is 757.
- Assessable capital gain is $538,500 × (757 ÷ 2355) = $173,097
- Net capital gain after applying the 50 per cent CGT discount for owning the property for more than 12 months is $86,548 (worked out as $173,097 × 50 per cent).
Farnaz includes a net capital gain of $86,548 in her 2025 tax return.
If you wanted to hold onto both properties, I suggest seeking tax advice as there are some tax strategies and implications to be aware of.
Craig Sankey is a licensed financial adviser and head of Technical Services and Advice Enablement at Industry Fund Services.
Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.
Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.
