Question 1

I’m going to be 66 this year. I rent a house, I work as a bookkeeper and I have very little super, almost $45,000 only.

What are my options for the near future? I’m worried.

The Association of Superannuation Funds of Australia has, for a long time, provided some retirement income estimates. For singles, this is:

• $55,923 a year for a “comfortable” retirement
• $36,434 a year for a “modest” retirement

The above figures assume you own your own home, i.e. you are paying no mortgage or rent.

Recently, it added a new category, one for renters:

• $51,164 a year for a “modest” retirement for renters

While coming up with your own retirement number is the best approach, the above does provide a rough guide.

A single age pensioner can receive up to $31,223 a year in pension payments (including supplements). Depending on how much rent you pay, you may also receive rent assistance up to $5700 a year.

This takes you to about $37,000 a year. If you can keep working, even earning a modest amount, say $1000 a month, this will get you close to $50,000 a year.

This will also let your super grow a bit more before you have to start drawing down on it.

Question 2

I have one property that I rent out. I have $300,000 in a bank. I do not receive a pension.

I am considering moving into the property and applying for the pension. I am 73. Is this possible?

Yes, that is possible.

Your investment property will currently be asset-tested, and rent will be income-tested.

If you move into the property and make it your principle place of residence, then it is no longer assessed by Centrelink. Only your $300,000 in the bank and any other investments you may have such as superannuation, will be assessed.

Non-homeowners do have a higher allowable asset limit before a reduction in the age pension kicks in. But it is only $267,000 more, and most properties are worth more than this, sometimes a lot more.

In Australia not only do homeowners receive favourable tax treatment, but they also receive favourable treatment under the age pension as well.

The below table, for a single person applying for the age pension:

* Pension is reduced by $3 a fortnight for each $1000 of assets over this threshold.

Question 3

My super is in an income stream. My wife has an accumulation fund.

If I withdraw from my fund and put it in her fund as a non-concessional contribution, will it become tax free when passed to a non-dependent?

Correct.

Funds contributed to superannuation as a non-concessional (after tax) contribution form part of the “tax-free” component.

The tax-free component is always paid out tax free, whether to the individual whose fund it is, or to any beneficiary after death.

Craig Sankey is a licensed financial adviser and head of Technical Services and Advice Enablement at Industry Fund Services.

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.