Should Deirdre put her earnings into super or shares or both?
Deirdre has worked hard to give her daughter the best education, but now it’s time to focus on her retirement plans. She asks Noel Whittaker how to structure her earnings.
I have spent a heap of money in the past 16 years. I have no education but heaps of grit. I immigrated with a young daughter, worked hard and put any money I had into my daughter’s education. She is now a radiologist with no HECs debt. I’m now 61, so it’s very important I plan correctly for my retirement.
I will be receiving $100,000 from family in the UK and wish to either invest it in super and build on that, or in shares. I have a stable job three days a week and receive $600 per week from a family commercial property my brother controls.
Could you please offer some advice? My thinking is to probably shore up my super and sacrifice $200 per week into it, then set and forget until I’m 67 and eligible for an Age Pension. I’m renting at the moment and will be for some time – until I perhaps receive an inheritance to buy a home. I just wonder what is the best option. I’d really appreciate some trustworthy options.
A. Certainly maximise your contributions to super. You are allowed a total of $25,000 a year in concessional contributions but these include the 9.5 per cent compulsory superannuation contribution from your employer if you have one. For example, if your employer was contributing $5000 a year, you could contribute an extra $20,000 a year as a tax deduction. Just bear in mind concessional contributions incur a 15 per cent entry tax. I note your comments about buying a house in the future.
If you buy a unit or house, you will be turning an assessable asset in terms of Age Pension eligibility, that is, savings, into a non-assessable asset and this could increase your pension enormously. To do the calculations, go to my website and play with the age pension calculators.
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Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature, and readers should seek their own professional advice before making any financial decisions.
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