Ask the Expert: When it comes to retirement, sometimes one house is better than two

Question 1

My wife and I are 70 and both still working full time.

We own two properties outright. We live in one – in our joint names – worth $700,000, where my wife has a home office and I have a music production studio.

The other is a rural property in my wife’s name worth $880,000, where I am a self employed piano technician, rebuilding up to 50 pianos for sale at any one time.

My wife has $220,000 in super and I have $100,000. She wants to retire, but I want to keep working.

I assume there is no way we can get any pension, other than selling everything and buying another property?

The trouble is, we have spent a lot of time and money getting our home perfect for us, and we don’t want to move! Any advice?

Fifty pianos – wow – you must have plenty of space at that property!

Your main/principal residence is not counted under the assets test. The principal home is generally the home in which a person or couple lives for the greatest amount of time each year.

Therefore, your other property plus the super for both of you would be assessed. This comes to $1.2 million. That’s about $150,000 over the limit to get a part age pension.

Of course, the government wants you to use your own resources first before paying you a full or part-time pension.

If your wife does retire, I assume you would need to start drawing down more of your super, which over time may put you under the asset test limit of $1,059,000 for a homeowner couple (as at July 2025 – and this figure is indexed).

There are not many options in relation to reducing your assets under the asset test. You could purchase a funeral bond each of up to $15,750 each and these are not assessed by Centrelink at all.

You could purchase a complying lifetime income stream with some of your super. Only 60 per cent of the purchase price is then counted. However, given you have already tied up so much money in property, you need to keep most of your super accessible in case of emergencies or lump sum requirements.

Over time you may qualify for a small age pension.

However, the big decision you need to make is whether it’s worth having a second property sitting there not generating much income, as this is keeping you from purchasing more income-producing assets and, potentially, getting an age pension.

Question 2

Hi, l am fully retired and self-funded at the moment, living off a bank term deposit and an income stream from my superannuation.

Are you be able to tell me if I can put my term deposit into super and add it to the income stream I already have or do I have to get a completely different income stream?

I’m not sure what to do the way superannuation is at the moment, they are a worry.

Regards, George.

Hi George, first, you have to make a contribution of your term deposit funds to get the money into a super accumulation account. You can only do this if you are under age 75.

From there, you have two choices:

• Start a new income stream with the term deposit funds,

Or

• Roll back your existing income stream to the super accumulation account and combine it with your term deposit funds. Then start a new income stream with the combined balance.

Remember superannuation is just a tax structure, not an investment. Within super you can hold any type of investment from cash, conservative, balanced, growth and shares – or term deposits.

Speak to your fund to get help with an investment mix that you feel comfortable with.

Question 3 

Hi Craig, it has recently dawned on me that vacant land is not assessed under the income test, so not subject to deemed income.

Outside of super, upon death the vacant land would be subject to the terms of the will not the whims of a super fund trustee, and depending on who ownership passes to, it may or may not be subject to capital gains tax until sold.   

If the conservation/gardening/or some such other recreation hobby in decades time resulted in a tall forest of valuable timber that until harvesting generated no income, then until that time would the land remain income-test exempt?  

At some point before harvesting the timber, or sale of the timbered land at a much appreciated value due to the standing timber growth, would Centrelink call for a vacant land valuation including the timber and severely cut the age pension payments accordingly?

You are correct. Vacant land does not get income tested. Only asset tested by Centrelink.

But unless you are working, have a lifetime income stream or interest rates are at record highs, most people are asset-tested, not income-tested. (The test that provides the lower benefit is applied).

Once trees/timber are becoming mature, the trees and the land may both be asset-tested. Any income from the sale would then also be income-tested.

You would be asked to provide an estimate of the net market value of your assessable assets. Including value of the land.

For some assets such as real estate, Centrelink may arrange for a valuation from a professionally qualified valuer at no expense to the client.

Yes, you should include instructions about this asset in your will. In relation to super, you should look at making a binding nomination so that the trustee has to follow your instructions, and so the funds are not at the “trustee’s whim”, as you put it.

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.