The crucial difference: Means-tested vs. universal pensions
Before digging into specifics, it's essential to understand the two main types of public pensions. Universal pensions, like US Social Security retirement benefits, are based on your earnings history and are not affected by your personal savings or assets. Your bank balance has no impact on your benefit amount or eligibility once you are receiving it. In contrast, means-tested benefits, such as the UK's Pension Credit or the Australian Age Pension, consider your financial situation (including savings) when calculating eligibility and payment amounts.
How means-tested pensions work with savings
For means-tested benefits, a government will assess your 'countable resources' or 'assets' to determine if you are eligible for a full or partial pension. If your assets exceed a certain limit, your pension payment may be reduced or stopped altogether. Importantly, these asset tests typically include more than just your savings account. Other assets, such as shares, bonds, and investment properties, are also taken into account.
United Kingdom: Savings and Pension Credit
In the UK, Pension Credit is a means-tested benefit that provides a top-up for low-income pensioners. Your savings can affect how much you receive, but there is no hard upper limit where you lose all eligibility automatically. The first £10,000 in savings and investments is completely ignored when calculating Pension Credit. However, for every £500 you have over £10,000, you are treated as having an extra £1 a week of income. This 'deemed' income reduces your Pension Credit payment.
- £0 - £10,000: No impact on your Pension Credit calculation.
- Over £10,000: Every £500 of savings reduces your Pension Credit by £1 per week.
- Other benefits: For other benefits like Housing Benefit and Council Tax Support, there may be different, sometimes stricter, capital limits.
Australia: The Age Pension and asset thresholds
In Australia, the Age Pension is subject to both an income test and an assets test, with the test that results in the lower pension being applied. Your bank balance is included in the assets test. The asset limits, which are updated regularly, vary based on whether you are single or a couple and if you own your home. Your principal home is typically excluded from this test.
Australian Age Pension asset limits (from September 2025)
| Situation | Homeowner (Full Pension) | Non-homeowner (Full Pension) | Homeowner (Part Pension Cut-off) | Non-homeowner (Part Pension Cut-off) |
|---|---|---|---|---|
| Single | $321,500 | $579,500 | $714,500 | $972,500 |
| Couple (Combined) | $481,500 | $739,500 | $1,074,000 | $1,332,000 |
- If your total assets exceed the full pension limit, your payment will be gradually reduced.
- If your assets exceed the part pension cut-off, your pension payments will stop entirely.
- Deeming rules also apply to financial assets, calculating a presumed income from your savings that can affect your pension.
United States: Social Security vs. Supplemental Security Income
In the United States, there is a major distinction. Your Social Security Retirement Benefits are not means-tested and your savings account balance has no bearing on your benefit amount. However, if you receive Supplemental Security Income (SSI), a separate program for the elderly, blind, or disabled with limited income and resources, your savings do matter.
- SSI asset limit: The federal limit for countable resources is $2,000 for an individual and $3,000 for a couple. A savings account is considered a countable resource.
- Exempt resources: The home you live in and one vehicle are exempt.
- ABLE accounts: Special tax-advantaged accounts known as ABLE accounts allow people with disabilities to save money without affecting SSI eligibility (up to $100,000).
Financial planning tips for pensioners with savings
- Understand your local rules: The first step is to confirm the specific pension and benefit rules for your country, as they vary significantly. Check official government websites for the most up-to-date information.
- Separate benefit types: Clearly distinguish between universal programs (like US Social Security) where savings don't affect your payments and means-tested programs (like UK Pension Credit or Australian Age Pension) where they do.
- Review all your assets: Remember that many means tests look at all your assets, not just your cash in a savings account. Include investments, shares, and other financial products in your calculations.
- Consider asset reduction strategies: For means-tested benefits, some asset reduction strategies may be permissible, such as prepaying funeral expenses or investing in your primary residence (rules vary by location).
- Use ABLE accounts (US): If you or a loved one with a disability receives SSI, an ABLE account can be a critical tool for saving money for specific expenses without jeopardizing eligibility.
- Seek professional financial advice: A qualified financial adviser or benefits counsellor can help you navigate the complex rules and develop a strategy that maximizes your entitlements while still allowing you to save for your future.
Conclusion: Navigating savings and pensions
The question of how much can a pensioner have in his account is complex and has no single answer. The key takeaway is to identify which type of pension or government benefits you are receiving. For universal programs like US Social Security, your savings are irrelevant to your benefits. For means-tested programs in countries like the UK and Australia, careful planning is required to ensure your savings do not negatively impact your entitlements. By understanding the rules, assessing your total assets, and leveraging professional advice, you can manage your finances effectively in retirement. For more detailed information on Australia's rules, visit the Services Australia website.
