Question 1. I am very near retirement, and I still owe about $600,000 on my house (victim of the 2008 GFC). Can I use my super to pay off the balance when I retire? How will this affect me going forward?

Many older Australians are now retiring with debt.

A recent study indicated that 31 per cent of those between 55 and 64 still had debt. An even more recent survey showed that the same number, 31 per cent, expected to carry debt into retirement.

For people over the age of 60, who have retired, they can access tax-free withdrawals from their super and utilise these funds how they wish. Hopefully, your level of super savings is larger than your debt.

However, I suspect this will severely deplete your savings which means you will mainly have to live off the age pension, where the maximum annual payment is currently (January 2023) $26,689 for singles and $40,237 for couples combined.

The good news is that if you do own your home then your fixed outgoings will be less. Studies have found that those with low assets and who are renting are finding it increasingly difficult in retirement.

Holding nearly all your wealth in your home will reduce your ability to produce an income above the age pension throughout retirement and may not be the best outcome depending on your objectives.

I would recommend seeking personal financial advice to see what other options you have available, such as downsizing or looking at a reverse mortgage (such as Centrelink’s Home Equity Access Scheme) to subsidise your income once you home loan is repaid.

Question 2. Thank you for your informative articles. Regarding non-concessional contributions to super with an annual cap of $110,000 – is there also an age cap on this, e.g. up to age 74? And, can you only make such a contribution if you sell a property? 

You can make non-concessional (after tax) contributions as long as you are under the age of 75 – no work test is required.

However, your total super balance has to be below $1,700,000 as at the previous June 30.

In addition to non-concessional contributions, if you sell your home, you can also make a ‘downsizer’ contribution to super, of up to $300,000 (each if a couple) so long as you meet the below requirements:

• The home must be in Australia, have been owned by you or your spouse for at least 10 years, and the disposal must be exempt or partially exempt from capital gains tax (CGT). Generally, this means the home has been your principal place of residence for at least some of this period
• You have not previously made a downsizer contribution to your super from the sale of another home or from the part sale of your home
• Prior to (or at the same time) as making your contribution you must provide your fund with the ‘Downsizer contributions into super form’.

Although with non-concessional contributions you must be under a certain age (75) and only allowed to have a maximum amount in super to be eligible to contribute, with the downsizer contribution it doesn’t matter how much you already have in super, and you have to be above a certain age.

Up until the end of 2022 you must be at least 60 to be eligible for the downsizer contributions but as a result of recent legislation, this age has now dropped to age 55 from January 1, 2023.

Question 3. My wife and I are fortunate, we both have superannuation paid as a pension. We have both around $300k in super I have managed funds $242K and she $567K.

We own our principal residence and because we live in a country town with absolutely no amenities we have a small residence in Adelaide (about $500K in value) which we do not rent (we use it for our personal health requirements). What do we need to do to be eligible for a Commonwealth Seniors Health Care Card.

For those that are age pension age but not eligible for the age pension (i.e. self-funded retirees), and hence also not eligible for the pension concession card, the Commonwealth Seniors Health Care Card (CSHCC) is worth applying for as it provides access to a number of federal government concessions including reduced cost medicines. However, concessions provided by state and local governments vary with the CSHCC.

There is no asset test with this card, only an income test.

Both major parties went to the last election promising to increase the limit on the income test, which has recently just passed into law. The income test is now very generous, as per below (as at January 2023):

• $90,000 a year if you are single
• $144,000 a year for couples.

Any investment and employment income is taken into account and your superannuation pensions are deemed to earn a certain return, not the actual payments received.

From what you have provided you should be eligible. You can apply via the Services Australia website.

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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