Are our retirement savings set up to best advantage?

What does Noel Whittaker think of Troy’s retirement income set-up?

Are our retirement savings set up to best advantage?

Troy* wants to ensure his retirement income is set up to provide the best lifestyle and flexibility and asks personal finance specialist Noel Whittaker for guidance.

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Q. Troy

I’m hoping you can provide some guidance for me.

I am 68 and my wife is 66 and we receive the full Age Pension. We have a self-managed super fund (SMSF) with a minimal balance and we are both beneficiaries and trustees.

We have not established a pension from the fund and understand the minimum annual pension would be five per cent should we proceed to do this. As it is now, any profit made by the fund is taxed by the Australian Tax Office at 15 per cent.

Should we both start a pension within the SMSF and keep that payment below the threshold so it won't affect our Age Pension and the fund would be non-taxable?

If we draw the minimum of five per cent from the fund, can we also withdraw additional funds, but not as part of the pension?

The additional funds would be used to pay regular payments (for example, council rates, insurances – car, home and contents – private health, credit card, golf club membership, perhaps a holiday and even a vehicle update.

A. If your SMSF has a minimal balance, I wonder why you are still incurring the annual costs to keep it going? It is well known that a person needs at least $300,000 to make a SMSF viable.

In any event, the treatment from Centrelink is not based on what you draw from the fund – it is based on the asset value.

For income test purposes, it is assessed under the deeming rates, and for assets test purposes, the account balance will be the amount used by Centrelink.

Based on what you have told me, you would be much better off to close the fund and hold the money in your personal names. This assumes, of course, that you would not lose any valuable insurance held by the fund.

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.

* Not his real name

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    Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.





    COMMENTS

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    johnp
    16th Oct 2019
    11:22am
    Re ""any valuable insurance held by the fund"" What sort of insurance would a 68 year old need ?? Assuming of course we are not talking about car, house, health insurance.


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