Question 1. I am 74 and my husband is 75. Recently we received a $500,000 inheritance. We are no longer paying tax, we have $700,000 in our own personal accounts and the same in a SMSF. I realise that I will be able to contribute $330,000 after July 1 and before I turn 75. Is there any benefit for us to do so considering we don’t pay any tax now?

You are correct in that you should be able to contribute $330,000 as a non-concessional contribution into super, before you turn 75.

The advantages would be that this could be combined with your other super, and a regular tax-free income stream commenced.

It would keep things nice and simple and ensure no future tax is payable.

On the other hand, you are required to draw down a minimum amount each year. Although you have to draw it down, you don’t need to spend it; you could then build up your non-super savings.

If you kept funds outside of super, you would then have a combined total of $1,200,000.

For 2022-23 each member of a couple (that is eligible for the Senior Australian Pension and Tax Offset) has an effective tax-free income of $29,783. Therefore, depending on the return you generate now or in the future, there is a chance you may end up paying a small amount of income tax on the earnings.

After age 75 you won’t have the opportunity to contribute any funds to super and remember you can withdraw the funds at any time, so I would be inclined to maximise the contributions when you can.

Question 2. Can I retire now? I’m 56½ years young. My principal place of residence is valued about $3.6 million and an investment property valued around $490,000-$510,000. Mortgages totalling $1 million. Super of $460,000 and wife has super of $258,000. No other major assets, or debts. I can always sell the PPR and investment property if things get tight but I’m thinking rent the PPR and live off the balance after the mortgage/expenses. But can I start to take weekly or monthly payments from the super? I haven’t yet reached my ‘preservation age’ (that term sounds like I should be dead).

Given your age, you won’t be able to access your super until age 60, as that will be your preservation age, but hopefully the age you do not die! And age 67 will be the age you become eligible for the age pension.

Whether you can retire now will mainly depend on how much income you want to live on throughout your retirement.

If you can look to keep working until at least age 60, this will allow your super to grow further by compounding returns and by additional employer SG contributions.

Even if you scale back the hours you work each week this will help to sustain and grow your super, which in turn would have a big impact on your retirement income.

You can use the Moneysmart retirement planner to run some numbers.

If you sell both your home and investment property, you still need somewhere to live, either buying a cheaper place or renting somewhere.

If retiring now was your most important goal, then as long as you are prepared to live on a much lower income and sell at least one of your properties to use the proceeds as income, then it would be achievable.

These funds would need to last until age 60, and then you could draw on your super.

It’s about finding the right balance for you, namely a lifestyle decision, retire now or soon, versus a financial decision, retire later, preferably past age 60 with a larger income.

Setting and achieving retirement goals is something a financial adviser specialises in, and I would recommend you seek advice on how to best navigate your future.

Question 3. My husband and I own our modest home, have no debt and have about $70,000 in super. We both have health issues and have used some of my super and all of his to fund gap payments for medical procedures and surgeries. He is 64 and retired, soon to get a Disability Benefit. I am 60 and working up to 20 hours a week. We are considering the option to sell our home and invest the money, we would move into an aged-care facility, paying rent. We don’t know if we should put the money into my super, or something else. Do you have any guidance? Is there a tax-effective way to do this?

Before being allowed to move into an aged-care facility, or to receive any aged-care assistance, your husband would need to have an aged-care assessment.

This involves a two-part assessment process that understands your needs and what services could help you.

It starts with a simple eligibility check, which you can do online or over the phone followed by an in-person assessment.

As there are so many variables in your situation, unfortunately it’s not appropriate for me to provide any firm guidance, apart from speaking with the government regarding the assessment and looking at the myagedcare website and then seeking personalised financial advice.

Craig Sankey is a licensed financial adviser and head of Technical Services & Advice Enablement at Industry Fund Services

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives. 

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