Q: My husband and I are retired. We receive the bare pension and health card and we have our super in a Family Super fund account in a bank. We are both over 65 and have a financial adviser who does our super at the end of the year. He charges a fee then sends it to an auditor, and he charges a fee. We have no investments so there is very little work to be done but these fees are not small. Our daughter says we should take it out of super and put in netbank saver account. Would this be wise and do we have to pay tax on it?
I suggest you visit an accountant to do a tax assessment for you.
The tax-effectiveness of super depends on the level of income that you receive in retirement. A couple can earn up to $54,000 tax-free outside the super environment due to the Senior Australians Tax Offset (SATO).
As a matter of feedback, I have been helping my neighbour come to grips with a web of loosely controlled financial matters after her husband died last November. One thing that caught my eye: I was absolutely staggered that they each had a small industry-managed super account around $130k – initial investment July 2007 was $190k – with ‘fees’ amounting to nearly $4k on each account!
I understood that she could have had an unearned, non-taxable income of around $30k simply by banking her cash and super funds in term deposits as might have been more appropriate to a couple in their mid to late 60′s and now, as a 71 year old widow, who had at least $2M in the home she would sell one day if she needed any money to live on. I understand she’s banked half the super funds but – surprise, surprise – her FA said she’ll have lost forever the capital reduction from the initial investment. I told her quite bluntly, she would have been better off sticking the original funds in the bank as your example above would have been their best option for their stage in life.
Please keep up the good work, Trish.
She thanked me for my help and now wonders how the FA could possibly justify her ‘advice’ as it hasn’t added any value to the initial investments. It seems to me that the ‘advice’ had only one purpose, and that was, to support the FA (which, unfortunately, could be taken to mean something akin to making love to everyone).