First Question
I will shortly turn fifty-nine. employed full-time, earning $73,061 before taxes. With a high growth investment mix (I switched from balanced since I felt super needed a lift), Super is $223,000. With monthly payments of $1420 and an offset account of $135,000, the $216,000 home loan, at 4.99 percent, is expected to be entirely offset in two years. No further financial commitments.
Because I am eligible for an age pension at that age and know I will need to take use of it, I am aiming for 67 as my retirement age. Once the home loan is fully offset, I intend to keep the offset amount equal to the loan balance and allow the loan to be paid down by the regular monthly repayments from the offset account. This will allow me to keep access to the funds in the offset account, mostly for emergencies.
According to my calculations, the debt will be paid off in full in 13 years, when I am 71 years old. Does this seem like a good plan, or is there something better I could do?
You are already ahead of a lot of folks because it is clear that you have thought this through and have a plan. It appears to be a sensible strategy at first glance.
Some other factors to think about:
After your debt is completely paid off in two years, it will be beneficial to reevaluate your approach. Maintaining the same loan repayment schedule might not yield the optimal tax and investment return. However, since many elderly Australians have trouble being authorized for fresh loans, it might be appropriate to keep an offset account.
Consideration should be given to looking at increasing super contributions through salary sacrifice. Your income tax will be reduced if you forgo your salary, and your long-term super returns should outpace the rate on your house loan. You will soon be able to access some of your superpowers because you are almost 60.
Finding out how much you want to live on in retirement is the next step in your strategy. This can be a significant query. However, it is crucial because it will dictate a lot of things, such as your savings plan and the amount of time you must work. Although your target age is 67, you may need or want to be flexible. Would you think about taking a part-time job? Or maybe that is what you want?
Overall, you have a feasible plan and are in a sound financial situation. Drilling deeper and aiming for a retirement income amount (rather than just a lump sum) would be the next steps. Then, you may check your progress using a retirement planner from Moneysmart or an online calculator from your super fund.
It is advisable to get personal guidance at the age of 60, as it is one of the trigger ages in super (when you can start to access some funds).
Question :
My wife has a super accumulation account with $500,000. She works three days a week, is 72 years old, and earns super through her job. Does she need to open a pension account? How much should she deposit, if so?
The majority of people only begin taking money out of their superannuation when they need to. The other justification, though, is that all pension earnings would be tax-free. Earnings from your super accumulation account are subject to 15% tax (minus any fund offsets).
Therefore, if two accounts had the same investments, a pension account would typically do better on after-tax returns than an accumulation account.
Regardless of whether you need the money or not, you must take out at least a portion of your pension account each year. The table below displays these.
The amount you transfer to a pension if you do not need the income is therefore a trade-off. Your wife will need to leave some money in her accumulation account to keep it open because she is still working and getting employer superannuation guarantee payments. You ought to inquire about the fund's minimum balance.
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