As the number of retirees grows and international travel becomes more problematic and expensive because of the pandemic, there is a surge in the number of gray nomads traveling Australia.
After all, what could be simpler than taking your caravan to drive around our country? No lost luggage, no fluctuating fares, and the freedom to do what you want.
An extended period as a gray nomad has the potential to affect the age pension.Credit:Shutterstock
However, there is a potential problem: the effect on your age pension.
A reader tells me that they use their son’s home as a base for mail and have rented out their house for three years, to gain some income as they travel.
However, they are concerned that their pension may be negatively affected because, once they move out, it would become assessable under the pension assets test. Their home is worth $900,000 which, together with their superannuation, would be enough to wipe out their pension eligibility.
This issue certainly needs thinking about if becoming a gray nomad is on your bucket list.
A Centrelink spokesman tells me that you can be absent from your home for up to 12 months and still be considered a homeowner, which means your principal place of residence is exempt from the pension assets test.
If you are overseas and unable to return because of circumstances beyond your control, this period may be extended. However, except for this circumstance, once the 12 months have expired, your house would be counted for the assets test. And this could be enough to make you lose the pension.
If you resume occupancy of your home within 12 months, and later leave the home again, a new 12-month exemption period begins.