Super tips and strategies if you are in your 50s

If your expenses are a bit lower because the mortgage is paid off or the kids have left home, now can be a good time to boost your super account by setting up a salary sacrifice arrangement with your employer if you don’t already have one. If you make extra super contributions from your pre-tax salary into your super account, you not only increase your super balance, you may also reduce your annual bill.

2. Check when you can access your super savings

Depending on your age, you may be able to get your hands on your super savings during your 50s. But you need to have both reached your preservation age (which varies depending on your date of birth) and met a condition of release.

Once you apply to access your super benefit, you can generally choose to withdraw an amount from your super as an income stream, lump sum or a combination of the two.

3. Reassess your investment option

Now you’re in your 50s, you will have a better idea of when you are likely to leave the workforce and the amount of retirement savings you will need. That makes it a good time to reassess your current investment strategy and decide if it’s still the right one to pursue until retirement.

It is also the right time to start learning about retirement investing and to check if you are likely to qualify for the Age Pension or Commonwealth Seniors Health Card. Both these government benefits can make a real difference to how much income you need in your retirement.

4. Review your insurance cover and beneficiaries

During this decade you may find your financial commitments lessen and you become mortgage free. This makes it a sensible time to review whether you need to change the level of your insurance protection within super. Some people, of course, may find they need to increase their insurance cover because they have a new family and young children.

Divorce or separation may also mean the insurance beneficiaries you named a few years ago are now no longer appropriate. Check your nominated beneficiaries so your benefit doesn’t end up with a former partner, or a new financial dependant doesn’t miss out. Also consider a non-lapsing death benefit nomination if it’s available, as a binding nomination expires after three years if you don’t renew it.

5. Consider how and when you want to receive your super benefit

In the final sprint to retirement, it’s wise to start thinking about how you want to take your super benefit – lump sum, income stream or a combination of both. That way you can think about what strategy will suit you best and what actions you need to take in the final years of your working life.

Consider whether it’s better to wait until you are age 60 to access your savings, as most people can take their super benefit tax free once they reach this age.

6. Consider getting independent financial advice

For some people, being in their 50s means it’s a sensible time to talk to an independent financial adviser about their retirement plans.

A good financial adviser can help you work out how much you are likely to have in retirement and whether you need to make additional contributions in the next few years to reach your retirement income goal. Advisers can also explain any tax you will need to pay when you receive your super benefit and discuss how best to invest your super benefit once you have left the workforce.

7. Make tax-deductible contributions

In your 50s, you may find your income is still high, so it makes sense to boost your super account with some voluntary super contributions if you can. You may be able to claim a tax deduction for them as well, leaving you with a lower tax bill.

Tax-deductible super contributions can come from a variety of sources including your take-home pay, savings, an inheritance or the sale of an investment asset.

8. Consider a transition-to-retirement strategy

If you are aged 55 or over, consider starting a transition-to-retirement (TTR) pension, as they allow you to reduce your working hours while using income from your super to maintain your lifestyle.

You can also salary sacrifice some of your salary into super to save tax and use a TTR pension to replace some or all your lost income, even if you continue working full time.

9. Check if you can make a small business contribution

If you are planning to sell your small business prior to retirement, you may be able to reduce your capital gains tax (CGT) bill and top up your retirement nest egg at the same time. The government’s small business retirement exemption could allow you to make a significant contribution into your super account if you are eligible.

10. Consider bringing your contributions forward

If you want to give your super account a last-minute top up, consider making a large non-concessional (after-tax) contribution.

Under the bring-forward rules, you can use three years of your non-concessional contribution cap ($100,000 in 2020-21) to make a significant contribution into your super account.