The lowering of the cash rate by the RBA is prompting people to consider other options to maximise their savings. So Gaye would like to know if super is a good alternative.
Q. Gaye
My husband hasn’t yet reached Age Pension age, but does not work. He has money in a high-interest bank account, but with the cash rate going down, would he be better off putting his money in a super fund and starting a pension account?
A. With bank interest rates being reduced, it is a good time to look at how your money could work better for you, especially if this is your only source of income. As we are not licensed to give financial advice, nor know the full extent of your financial position, we can’t comment as to whether or not this would be the best course of action. However, some of the issues you should consider include:
- any penalties you may have to pay when removing your money from a high-interest account
- the fees and charges involved in a super account; even though it can be the most tax-effective way to plan for retirement, paying a lump sum into superannuation may not deliver the tax-effective savings for which you hope
- the type of pension account your husband starts, as it may also affect any Centrelink benefits he receives, or hopes to receive.
I would suggest that before you make any financial decisions, you make an appointment to see an independent financial advisor to find out how to best structure your finances. You can also make an appointment to see a Centrelink Financial Information Services Officer who will be able to give you information on possible options. You can do this at any time, whether or not you’re a current Centrelink customer, by calling 13 23 00.