Gordon aims to retire in three years and has a plan that he hopes will allow he and his wife to satisfactorily manage their retirement. He asks personal finance guru Noel Whittaker for his thoughts.
Q. Gordon
I’m 62 and plan to retire at 65. My wife is 59 and will retire in the next 12 months. We have an investment property in a self-managed super fund (SMSF) with about $250,000 debt on it. There is currently about $400,000 equity in the property (it is valued at approximately $600,000 to $650,000). We expect to be able to pay off the debt on the property in the ensuing years (before I retire) with a gifted amount. We currently have about $250,000 in our combined super. We own our family home.
My plan on retirement is to use the rental income of about $500 per week, plus an additional $500 per week from our super fund. We will run down the super fund ‘cash’ until we need to sell the investment property to cash up our super again. We will ultimately have to rely on a pension, but are planning for that to be in our later lives when spending to this level will not be needed. Does this make financial sense?
A. Based on the information supplied, you should be able to access your superannuation when you retire, and when your wife stops work permanently. You should be able to contribute money to your fund to pay off the property debt, because the debt is not great and you would be under the limits for contributions. I guess the big issue is whether the property will continue to give the rent it has been giving. But summing up, what you say seems reasonable.
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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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