Source : the age
My super balance has been up and down like a yo-yo the past couple of months. That never used to bother me, but since I turned 60 last year, and with retirement visible on the horizon, I find myself checking my super balance far more frequently. When should I be looking to change the investment options within my super fund? I expect to retire in the next three to five years.
It certainly has been a bumpy few months. You would typically look to reduce the level of risk in your superannuation account around three years before retirement. That doesn’t mean going entirely to a capital secure option.
With retirement on the horizon, it can feel like the sky is falling. But there’s no reason to panic.Credit: Simon Letch
But moving some portion of your retirement savings to a lower risk option, perhaps two or three years’ worth of retirement income, would make sense.
The aim is to avoid the need to sell growth assets when markets are depressed. By holding a portion of your super in a low-risk option, you could live off this sum for a few years if necessary, giving the remainder of your savings time to recover.
I am about to receive an inheritance and would like to add the funds to superannuation. However, I am a self-funded retiree and my super is in pension mode, which I understand can’t be added to. So how do I get money into super? I am under 75.
It’s a bit convoluted, but here’s what you need to do.
Establish a new superannuation accumulation account and deposit your inheritance monies. Then have your existing pension account rolled into that accumulation account, merging your retirement savings into the one pool. Finally, you would create a new pension from the now combined superannuation savings.
Note that depending on the sums involved, there could be transfer balance cap and contribution cap considerations here, so certainly one to discuss with your financial planner.
I am currently renting following a recent divorce. I am 61 and still working. Should I use my super to buy a home, so I can stop paying rent? I have approximately $1 million in super. I don’t have a lot else asset wise.
Initially, it would be worth clarifying whether you currently have access to your superannuation. Between the ages of 60 and 65 you need to have ceased gainful employment for your superannuation to be accessible.
This cessation of employment need not be permanent, however if you’ve worked continuously since turning 60, the funds might not be accessible right now. Upon reaching age 65, no such restrictions apply.
Assuming the funds are accessible, the challenge you have to deal with here, which I’m sure you are aware of, is that if you use this money to purchase a home, your ability to generate retirement income will be greatly reduced.
For age pension purposes, the home is ignored in the asset test. Perhaps you use a significant portion of your superannuation savings to purchase a home, work through until age 67, and then retire on a combination of pension plus some superannuation income to top that up.
Whilst working, the location of your home is somewhat dictated by the practicalities of getting to and from your workplace.
Once retired, however, you have far more flexibility regarding location, and therefore may be able to find a suitable home at a lower price point. A tree change type move. If you think this could be on the cards, then perhaps you delay the home purchase until retirement.
Paul Benson is a certified financial planner at Guidance Financial Services. He hosts the Financial Autonomy podcast. Questions to: paul@financialautonomy.com.au
- Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
