If you or a family member is heading for retirement, this information will help.
Will you have enough super to retire and live the lifestyle you aspire to?
With the average life expectancy of Australians being 82.5 years, how long will their savings last? Recent ‘Super Shortage’ research indicated that a retirement age of 65 years could create a super shortage of 12.5 years for Australians to live the retirement lifestyle they aspire to from 65 years.
Will you find yourself asset rich but cash poor in your retirement?
There are many options to consider when planning your future retirement cash flow. HOW will you fund your ideal retirement lifestyle? WHEN do you make changes?
Just one retirement strategy is downsizing, but…
Is it time to downsize?
One of the biggest decisions for many retirees is whether to stay in the family home or purchase smaller or ‘retiree’ accommodation. It may be your most significant decision both financially and emotionally.
Ultimately, downsizing from your family home should provide you with a whole new way of life that is better than the one you left behind. With careful planning and a clear understanding of your future goals you will be well on the way to making it your best move yet!
Is the government’s ‘downsizing into superannuation’ for you?
From 1 July 2018, the Australian government allowed homeowners aged 65 years and over to downsize their family home and invest up to $300,000 of the surplus into their super (eligibility criteria apply).
It was announced by the government as part of reforms to reduce the pressure on housing affordability. It may also come as a relief and a welcomed strategy for many retirees, particularly those on the east coast who may have reaped the rewards of equity growth over the past decades.
About the downsizer measure
The downsizer contribution:
• Is not a non-concessional contribution and will not count towards your contributions caps
• Can still be made even if you have a total super balance greater than $1.6M
• Will not affect your total super balance until your total super is re-calculated to include all your contributions including downsizer contributions at the end of the financial year
• Will also count towards your transfer balance cap, currently set at $1.6M
• Is only applied for the sale of one home. You can’t access it again for the sale of a second home
• Must be made within 90 days of receiving the proceeds of sale, which is usually at the date of settlement
• Is not tax deductible and will be taken into account for determining eligibility for the age pension
If you sell your home, are eligible and choose to make a downsizer contribution, there is no requirement for you to purchase another home.
There are other eligibility criteria to meet and each individual’s circumstances must be assessed for suitability.
The ATO website explains all eligibility requirements. Or contact us and we can put you in contact with a specialist to help you.
Time will tell if this downsizing contribution into superannuation will be an attractive option for retirees.
As your finance specialist we welcome the opportunity to discuss your future plans or those of your parents!
Through our own knowledge and that of our networks, we can help you live your dream retirement lifestyle.