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- 1. Check the rules for accessing your super
- 2. Consider a transition-to-retirement strategy
- 3. Contribute to receive a government co-contribution
- 4. Reassess your investment option
- 5. Make some last-minute contributions
- 6. Consider making a downsizer contribution
- 7. Ensure you meet the work test before contributing after 67
- 8. Work out your retirement budget
- 9. Consider getting independent financial advice
- 10. Review your super beneficiaries
Once you hit your 60s and 70s, enjoying retirement is usually your main goal – whether you’re still getting ready to put your feet up or you have already made the break. But that doesn’t mean your retirement finances don’t need attention.
Even now super isn’t a set-and-forget investment. It’s still important to keep an eye on your super investments and ensure they are working hard for you.
To help, SuperGuide has put together a list of useful tips and strategies to check at this stage of your life. Not all the tips are suitable for everyone, but they should help you think through some of the super-related issues you need to consider.
1. Check the rules for accessing your super
Once you reach your 60s, the rules for accessing your super change – and so does the amount of tax you will pay when you take your benefit.
After your 60th birthday, most people can take their super benefit tax free. You can also choose to withdraw your super as an income stream, lump sum or a combination of the two.
2. Consider a transition-to-retirement strategy
If you’re in your 60s, it still makes sense to consider starting a transition-to-retirement (TTR) pension, as it will allow you to reduce your working hours while using income from your super to maintain your lifestyle.
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You could also salary sacrifice some of your salary into super to save tax and use a TTR pension to replace some or all of your lost income – even if you continue working.
3. Contribute to receive a government co-contribution
If you are now working fewer hours and earning a lower income, check if you are eligible for a government co-contribution into your super account.
You could be eligible for a co-contribution of up to $500 a year when you make personal (after-tax) contributions to your super fund. If your total superannuation balance is greater than $1.6 million, however, you will not be eligible for co-contribution scheme contributions.
4. Reassess your investment option
Once you are in your 60s and retirement is either around the corner or you have already retired, it’s definitely time to review your investment strategy and check the level of risk you are taking with the savings in your super account or super pension. It’s also a good time to learn more about investing in retirement.
Check if you qualify for the Age Pension or Commonwealth Seniors Health Card. These government benefits can make a big difference to how much income you have in retirement. They also allow you to access a range of other valuable benefits – even if you only qualify for a small pension.
5. Make some last-minute contributions
If you want to give your super account a final boost, consider making a large non-concessional (after-tax) contribution.
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Under the bring-forward rules, you may be able to use three years of your non-concessional contributions cap ($100,000 in 2020/21) to make a larger contribution into your super account.
6. Consider making a downsizer contribution
If you are aged 65 and over and are ready to downsize – or simply want to put more into your super account and are willing to sell your current home – it could be worth considering a downsizer contribution.
These contributions allow a couple to invest up to $600,000 ($300,000 each in 2020/21) from the sale proceeds of their family home into their super account.
7. Ensure you meet the work test before contributing after 67
Although anyone under the age of 67 can make both concessional and non?concessional contributions into their super account even if they are not working, once you reach age 67 you must meet the conditions of a work test to make some types of contributions.
Once you hit 67, to put extra money into your super account you need to prove you are gainfully employed, which means satisfying the superannuation work test. You may also qualify for the one-off work test exemption if you are a recent retiree.
8. Work out your retirement budget
Before you retire, it’s important to work out a budget for your retirement years so you know how much you will have to spend each year. Work out how long your super will last and what lifestyle you can afford with the money you have saved.
Calculate how much income your super and non-super assets will provide and how this compares to your retirement budget. If the two figures are a long way apart, consider whether you may need to continue working or even return to the workforce.
You can also look at options like the government’s Pension Loan Scheme, which could provide you with additional income through a reverse mortgage-style loan against your home.
9. Consider getting independent financial advice
When you reach your 60s and 70s, it can be a sensible time to talk to an independent financial adviser about your retirement, investments and a budget for your new lifestyle.
A good financial adviser can help you work out how much you are likely to have at retirement and they can also explain any tax you will need to pay when you receive your super benefit. Advisers can also help with decisions about taking a lump sum or a super pension, together with helping you work out how best to invest your super benefit and non-super assets to generate an income that will last for the rest of your life.
10. Review your super beneficiaries
During these years it’s important to check your super beneficiaries. Divorce, separation or even death may mean the insurance beneficiaries you named a few years ago are no longer appropriate. Check your current nominated beneficiaries so your benefit doesn’t end up with a former partner, or with a non-tax dependant beneficiary who is faced with a big tax bill when they receive your super benefit.
Check to see if your super fund offers a non-lapsing death benefit nomination, as binding nominations expire after three years if you forget to renew them.