Can I Spend My Money and Increase My Age Pension? (What Centrelink Allows in 2026)

One of the most common questions retirees ask is:

"Can I spend some of my savings and receive more Age Pension?"

The answer is often yes.

However, it's important to understand the difference between legitimate spending and trying to manipulate the system.

Many retirees are surprised to learn that certain types of spending can improve both their lifestyle and their Age Pension entitlement.

Let's look at how it works.

Why Spending Can Affect Your Age Pension

The Age Pension is assessed using two key tests:

• The Assets Test

• The Income Test

For many retirees, the Assets Test is the limiting factor.

This means that reducing assessable assets may increase pension entitlement.

👉 New to these rules?

Read:

Assets Test Explained
/assets-test-age-pension-australia

Income Test Explained
/income-test-age-pension-australia

The Difference Between Spending and Gifting

Many people confuse spending with gifting.

Spending money on yourself is generally treated differently to giving money away.

For example:

Spending on Yourself

• Home renovations

• New vehicle

• Medical expenses

• Travel

• Household improvements

Generally reduces your assessable assets immediately.

Giving Money Away

Centrelink gifting rules may continue to count some gifted amounts for up to five years.

👉 Learn more:

Gifting Rules and the Age Pension
/gifting-rules-age-pension

Home Improvements: One of the Most Common Strategies

Because your principal residence is generally exempt from the Assets Test, some retirees choose to invest in their home.

Examples include:

• Kitchen renovations

• Bathroom upgrades

• Solar installations

• Accessibility modifications

• Home maintenance

This may improve quality of life while potentially reducing assessable assets.

💡 Key Insight

The goal isn't to spend money simply to get more pension.

The goal is to improve your overall financial position and lifestyle while understanding how Centrelink rules apply.

Can Buying a New Car Increase Your Pension?

Potentially.

Vehicles are assessable assets, but many retirees replace older vehicles as part of their retirement planning.

The decision should always be based on genuine needs rather than pension considerations alone.

What About Travel?

Many retirees spend years delaying travel plans.

Using savings for meaningful experiences may:

• Improve lifestyle

• Reduce assessable assets

• Create memories that matter

The key is ensuring spending aligns with your broader retirement goals.

🔥 Not Sure Whether This Applies to You?

We help Australians understand how their assets affect their Age Pension and identify opportunities to improve their retirement position.

👉 Book a Free Age Pension Assessment

Should You Pay Off Debt?

For many retirees, reducing or eliminating debt may provide significant benefits.

Potential advantages include:

• Improved cashflow

• Reduced financial stress

• Lower ongoing expenses

In some situations, debt reduction may also affect Age Pension outcomes.

Should You Sell an Investment Property?

Many retirees hold substantial wealth in investment properties.

Selling may:

• Release capital

• Reduce management responsibilities

• Change Age Pension eligibility

However, there can also be tax and cashflow consequences.

👉 Related article:

Should You Sell an Investment Property to Increase Your Age Pension?
/investment-property-age-pension-strategy

Common Mistakes to Avoid

Some retirees:

• Give money away without understanding gifting rules

• Make major purchases they don't need

• Focus only on increasing pension rather than overall wealth

Remember:

The objective is not simply to maximise your pension.

The objective is to maximise your financial wellbeing.

How to Know Whether Spending Makes Sense

Every retiree's situation is different.

Factors include:

• Current Age Pension entitlement

• Asset levels

• Income requirements

• Health considerations

• Family circumstances

This is why personalised advice can be valuable before making major financial decisions.

👉 Comprehensive guide:

How to Increase Your Age Pension in Australia
/increase-age-pension-australia

👉 Want to Know Whether You Could Improve Your Pension?

Most retirees don't know exactly how their assets affect their Centrelink entitlements.

We can help you:

• Understand how Centrelink assesses your finances

• Review your assets and income

• Identify opportunities to improve your position

• Develop strategies aligned with your retirement goals

👉 Book Your Free Consultation Today