I’m 59 and my wife is 68. I work full-time and my wife works part-time. We are looking at gifting our son $500,000 after the sale of our house. We presume this gift excludes us both from receiving any pension for five years. Are we correct in thinking that after five years the $500,000 has no impact on our pension asset test?

That’s a very generous gift. For Centrelink purposes, that $500,000 that you have given away will be considered yours for the next five years.

Early inheritances are well and good, but make sure you don’t regret gifting away money you might have actually needed.Credit: Simon Letch

As to whether that rules your wife out of eligibility for the age pension depends on your other assets and income. You are not eligible until 67 years of age, so the gift would have no impact for you, only your wife.

I am always concerned when retirees talk of making large gifts as a way to increase their age pension entitlement. We are all living longer and longer. Are you certain you won’t be needing this money later in life?

Early inheritances are great and to be encouraged when it is clear a retiree has wealth comfortably exceeding their needs, but if you are on the cusp of age pension eligibility, that would suggest your savings are more in line with what is needed for a comfortable retirement, rather than excessive. Please consider carefully whether a gift of this magnitude, at this point in life, is prudent.

I am 65, no longer working, and have a healthy super balance in the accumulation stage where I am paying 15 per cent tax on earnings. I do not receive a government pension and do not expect to in the future. I own my home and I am currently living on personal savings which I expect will last me four years. My question is this: should I put my super into a pension phase account to remove the 15 per cent tax on earnings, but which will require me to withdraw a minimum amount, or leave the money in the accumulation account and continue to live on my savings?

A great question. Most commonly I would suggest converting your accumulation account to a pension as your returns will be a little better due to the removal of the earnings tax. You are right, however, to identify the drawback, which is that you will then be required to draw down 5 per cent of the balance each year, increasing as you get older.

If you don’t need this income, that means over time a greater proportion of your wealth will accumulate outside the superannuation environment, becoming taxable.

It could be, therefore, that the 15 per cent earnings tax you save on your superannuation savings is replaced by personal income tax on investment earnings in the future. Plus now you have the headache of needing to lodge personal tax returns each year.