Accessed Super Early? How to Rebuild

The core purpose of superannuation is to provide a nest egg in retirement. Creating less dependence on Government support and more financial independence and lifestyle choices for individuals.

In an attempt to ease some of the financial hardship caused by the impact of COVID-19, the Government has approved early access to superannuation, an important initiative to help make ends meet during uncertain times.

If eligible, initial applications may be made to withdraw up to $10,000 before 30 June 2020. And up to another $10,000 between 1 July and 31 December 2020.

Early withdrawal considerations

Before accessing super, it is important to consider:

  • What other benefits or concessions are available to you in this time of financial hardship?
  • What will the impact be on retirement savings?
  • Will this impact other benefits in super? Redeeming down to a certain level may cancel insurances.
  • What are the minimum account balance requirements?

What are the impacts?

The impacts of withdrawal on future retirement savings is dependent on a number of variables.

These include:

  • How much is withdrawn;
  • Age and years to retirement;
  • Investment allocation and future returns;
  • Fees and other account expenses;
  • Any contributions made to the account.

Boosting and rebuilding

While the current focus may be keeping one’s head above water, when circumstances change and potential income returns, there are a number of ways to boost retirement savings.

Small, regular contributions can be important when getting superannuation savings back on track.

When it comes to super, the sooner action is taken, the higher the chance of getting super savings back on track.

Ways to boost and rebuild super include salary sacrifice, receiving government co-contribution, making or receiving spouse contribution, making catch up concessional contributions and making personal contributions to claim a tax deduction.

How do these strategies work?

There are a number of key contribution strategies that may boost and rebuild retirement savings. Before taking any action, RJS recommends seeking professional advice from a professional, who will tailor recommendations to your personal circumstances.

1. Sacrifice pre-tax salary to super

This strategy may be appropriate for those who have sufficient cash flow to divert some of their pre-tax salary to superannuation, rather than as take-home pay. Making additional voluntary contributions to super will help rebuild the account balance however it is an out of pocket expense which should be acknowledged. These tax effective super contributions can also boost cash flow by reducing the assessable income.

2. Government Co-Contribution

Those who earn less than $53,564 pa can make personal (after-tax) super contributions up to $1,000 pa (less than $20 of the weekly budget). If requirements are met, the Government will contribute $500 into your super account. The amount received is dependent on income and the total annual personal contributions made.

3. Spousal Contributions

Where one spouse earns less than $40,000 pa, the higher earning spouse, may make a super contribution on their behalf. This may enable a tax offset of up to $540 depending on the contribution amount.

4. Personal Contributions

Personal contributions are made after-tax, from take home pay or savings. These payments are non-concessional and can be made regularly or closer to the end of financial year rather than committing to regular payments.

5. Catch-Up Concessional Contributions

If the annual concessional contributions (CC) cap has not been fully utilized since 1 July 2018, you may have accrued unused CC’s, allowing larger contributions in a future year. Unused CCs can be carried forward for up to 5 years, however there is a maximum superannuation balance of $500K on 30 June the previous financial year.

Read more on super strategies in our fact sheet here.

While retirement may still feel like it’s a while away, with correct preparation it can be possible to achieve the lifestyle you deserve.

Are you taking the right steps towards a comfortable retirement? Let us help steer you in the right direction. Talk to our Strategic Wealth Planners and schedule a consult by clicking here.
This blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individual’s personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.

Busting the Super Myths

We often see people put Superannuation in the ‘too-hard basket’ and assume all will be fine when it comes time to retire. You can’t afford to be complacent these days. Your financial future depends on it. Take a look below where we bust the super myths and set the record straight.

 

Busting Super Myths - RJS

I have no control over my Super!

The Super landscape has changed considerably since compulsory superannuation was legislated in 1992. New laws introduced in 2005 saw Australian workers able to choose a super fund for their retirement savings, rather than a fund specified by their employer.  Since then we’ve also seen self-managed super funds (SMSF) grow in popularity. Today, there is also a greater choice of retail and industry super funds, varied investment options, and more control than ever.

Where there once used to be limited investment options, many funds now offer a varied range that goes beyond conservative, balanced, and growth. Some even often a pseudo-SMSF option where you have control over direct investment in shares, exchange traded funds, or term deposits.

For even greater control over your investment strategy, you may wish to consider a self-managed super fund (SMSF). These aren’t for everyone so it’s best to engage a professional advisor to discuss your options.

I don’t have to worry about Super yet, I’m years away from retirement.

No doubt you’ve heard the saying “Time in the market, not timing the market”. Now is the time to pay attention to your superannuation. Give your retirement savings a boost with the benefit of time.

It’s important to consider your current age, your expected retirement age, and your risk profile when making decisions regarding your super. Whether you’re 10 years from retirement or 30 years – investing time now to consider your super options, will pay off when you retire. A long-term approach enables your investment to ride out the natural cycles of the highs and lows rather than relying on hope and chance that makes markets and economies perform outstandingly well over a short period of time

We go into more detail here about why focusing on your Super now will mean huge benefits for your future.

Busting Super Myth RJS 1
Source: Photo by rawpixel.com on Unsplash

I’ll keep my super in a few funds for diversification.

Although diversification is widely talked about in the finance space, it isn’t generally used when discussing how many super fund accounts a person should have. By maintaining several accounts, you’re likely paying administration fees that are easily avoided.

Many funds now offer extensive diversification within their investment categories. And some even allow direct investment as we mentioned above.

Consolidating your super means you will enjoy fewer fees and less paperwork. Many super funds also offer various insurances as part of their accounts so it’s important to review your needs and eligibility before consolidating.

You should also consider any investment or tax implications when reviewing your super. Let us help you review your funds to get the best outcome for you

Source: Photo by William Iven on Unsplash
Source: Photo by William Iven on Unsplash

I’ll lose my money if the market crashes

Investing based on your risk profile is important for peace of mind. However, it is important to know that your risk profile may change depending on your age, your personal circumstances and how long you have until retirement.

There is a wide range of investment options in super funds that reflect the different risk profiles of members. You can view fund performance and market reports and choose how you would like your retirement savings invested.

Your skilled financial adviser can explain these to you and help you better understand what it means to you. With the help of your experienced financial adviser, you can view fund performance and market reports and be in a more confident position to choose how you would like your retirement savings invested.

By taking a proactive and more educated approach to your super,  your investment strategies can be better managed as your risk profile changes through your life. For example, this may mean mitigating your risk and reducing exposure to volatile markets as you get closer to retirement.

Over to you

You can’t afford for your Super to be ‘set and forget’ these days. And there’s no reason to. It’s important to make sure your super is working for you. Speak to one of our super experts and find the best ways to boost your retirement savings.

This blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this fact sheet can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.

Investing for income when interest rates are low

Looking for income producing assets while interest rates are low?

Investing for Income when interest rates are low

The official cash rate has been sitting at a historic low of 1.50% p.a since August 2016. With global growth barely moving and consumer debt at high levels, it’s conceivable that rates could remain low for a long time to come.

Lower rates over a number of years aren’t all bad. Offering benefits for those paying off a mortgage or funding a business, but it is the savers and income investors who get hurt the most.

With cash investments offering low returns, those nearing retirement are going to have to save more while working to meet their retirement goals. And that’s difficult enough as it is with an increased cost of living.

Fortunately, there are a few options available outside of cash, when investing for income when interest rates are low.

Risk versus reward when investing for income

It’s important to know upfront that while there is some promising income producing investment ideas in the current low-interest rate environment, they do come with a higher level of associated risk. That’s something you need to wrap your head around before you start thinking past a savings account or term deposit for better returns.

By diversifying your investments across a range of asset classes, you can prevent exposing yourself to an unacceptable level of risk by putting all of your eggs in one basket.

We’ve put together some of the income-producing investments available to you in this low-interest rate environment. Together with what you need to consider when deciding to invest. As everyone’s situation is different, professional advice from an experienced adviser is recommended.

High Yield Shares

When interest rates are low, shares are one of the first options that investors turn to. Interest payments are often a major cost for businesses so when rates are low it can mean that business profits increase and share prices rise.

Investing in the share market will expose you to increased volatility, so determining your level of portfolio risk is an important first step as share prices fluctuate all the time so are not ideal for short-term investments.

Even blue-chip shares can be riskier than other investment options, as high dividends can potentially mean the company has less to invest in future growth. So when investing for income, it’s important that stocks are not only healthy but have a strong history of paying dividends from a stable earnings base.

Dividend franking coupled with the potential for capital growth make high yield shares an attractive option. With share trading platforms making it easy to sell and buy quickly for low entry and transaction costs.

Bonds

Bonds offer a stable investment by providing a reliable income. Government bonds are often an attractive option as you can invest with a small budget and invest directly on the ASX, just like you would shares. Where other types of bonds are harder for individuals to access.

Corporate bonds offer a way for you to indirectly lend money to a company, with the company making interest payments to you as a return. This helps companies to raise funds.

While they tend to be safer than other investment alternatives, a result is lower yields and the risk that you may not always get your money back on corporate bonds.

Exchange Traded Funds (ETFs)

Rather than investing in individual shares, some investors prefer ETFs, which are managed funds directly traded on the ASX.

While traditional ETFs track the share market index, there is now a huge range of ETF options available with some specifically designed to generate income. In these cases, the funds offer exposure to high-yield shares with regular franked dividends, or even invest in high-interest deposits.

ETFs can be an effective way to diversify and help you get low-cost exposure to assets that might otherwise be out of reach.

While ETFs are seen as a low-cost option, you will need to consider having to pay a management fee and brokerage when you buy and sell.

High Yield Managed Funds

Managed funds are worth considering to get affordable exposure and diversification to a range of income generating assets.

They are great for being able to be tailored to a different balance of risk and return depending on your risk profile, as they allow you to diversify across asset types, industries and countries.

The fund you choose will charge a management fee as professional expertise comes at a cost. So be sure to look for a provider that offers value and take into account the impact the fee will have on your returns.

Peer-to-peer lending

A relative new-comer to the income-producing investments arena, peer-to-peer lending allows investors to lend money to a borrower through a third-party lending site. The borrower pays you back at an agreed rate of interest within a specified time frame.

The rate of return for peer-to-peer lending is higher than a savings account, however, does come with the added risk that the borrower may default on the loan and there is a chance you won’t get your money back.

Growing your income producing investment portfolio

With a range of options to choose from, you might determine that a diversified portfolio made up of a few of these investment options may allow you to enjoy higher yields while managing risks.

Unlike cash, none of these investments are government guaranteed, but you may reduce your risk through diversification.

Over to you

In the sustained low-interest rate environment, are you investing in income-producing assets? If you need help building your portfolio, talk to RJS Wealth Management. We’ll work with you to tailor an approach that is unique to your needs.

This blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.

Is my Superannuation safe if I become Bankrupt?

Some individuals that realise they are heading towards the bankruptcy route will try to funnel their assets in superannuation for an “assumed” protection of these monies and assets. This is simply not the case.

According to the Bankruptcy Act, superannuation is usually a protected asset and falls under the category of ‘non-divisible’ property. Non-divisible property is property which a trustee cannot take from a bankrupt. In relation to super, it is the interest that a bankrupt has in a regulated superannuation fund or a payment from such a fund received on or after the date of bankruptcy that may be at risk.

Is my superannuation safe if I become bankrupt?
The truth about bankruptcy: Although filing for bankruptcy is meant to give people a fresh start by relieving burdensome debt, you must consider pros and cons if you are thinking about this option.

 

The Bankruptcy Act was modified with effect from 28 July 2006 to prevent debtors from funneling their assets into their superannuation to protect their monies from creditors. When a trustee is looking at contributions made after this date and prior to bankruptcy they will consider the following;

  1. Were the contributions made to the superannuation fund out of character?
  2. Would the assets have formed part of the bankrupt’s estate and otherwise been available to creditors
  3. Is the superannuation fund complying and regulated?

If the answer is ‘no’ to the first two questions and ‘yes’ to the last, then it is very likely that the superannuation funds are protected from creditors. Trustees will look at inconsistent payments and this can include where a debtor funnels their wages into superannuation instead of receiving them into their bank account or additional salary sacrifices are made above and beyond past contribution levels.

Your superannuation made by your employer and any normal salary sacrifice arrangement or personal contributions are usually safe from bankruptcy. Assets purchased by the superannuation fund are also protected if they were purchased without the intent to defeat creditors.

What’s not protected?

Any assets put into your superannuation account that are deemed to have been made to avoid paying creditors can be clawed back. If you are already retired and withdrawing an income from your superannuation, then this amount is not protected if the withdrawal amounts exceed the below income limits.

Bankruptcy Table

Any lump sum withdrawals you made before becoming bankrupt are also not protected and any remaining balance in your bank account will form part of the assets available to creditors. Conversely, lump-sum payments made after bankruptcy are protected.

Superannuation as an asset protection strategy

If you are considering using superannuation as an asset protection strategy, then it is important that you;

  • Make ongoing and consistent contributions to avoid the possibility of clawback
  • Retain records of your contributions and other financials to prove you were not insolvent at the time of making contributions
  • Keep superannuation in the accumulation phase during bankruptcy (if retired) and only take lump sum payments
  • Talk to your Planning Professional about the best superannuation strategies to achieve your retirement lifestyle goals

What to do if you are facing or considering bankruptcy?

Never go on this route alone. At RJS Wealth Management, we’ve mastered the six stages of financial planning. Find out how we use them to help you reach your financial goals. Contact us on 1300 888 803. There are many other options available and utilising your Planning Professionals knowledge of the law and creditors can help you prevent going down this route. For assistance with debt related issues, bankruptcy and superannuation matters, we are here to help. Please give us a call on 1300 27 28 29 to discuss these matters with you confidentially.

Australian Personal Bankruptcies 2013 - 2017
*2 S139. Figures are current at 1 July 2017. Refer to Australian Financial Security Authority for current and additional rates.

This blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this fact sheet can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.

You can be Young without Money, but you can’t be Old without it

Did you know there is a good probability you could outlive what you save for retirement? Scary thought isn’t it?
Find out if you can outlive your retirement savings and live your life to the fullest? As the saying goes, “You can be young without Money, but you can’t be Old without it”

Life expectancy

So said Tennessee Williams, the American Playwright in the movie Cat on a Hot Tin Roof. This quote was made in the 1950s and its relevance is never truer than now.

The Australian Pension age goes up to 67 by 2023 and at this stage is only available for those with under just over $800,000 in assets (in addition to the family home). It’s a catch 22. If you have planned well, by then your superannuation and other assets are likely to be valued at more than this. And if they aren’t, then the pension is not enough to live a comfortable retirement lifestyle.

How much is enough to retire on?

One way to look at how much you will need is to calculate your life expectancy (see table below), calculate your living expenses. If you are a couple, work out the amount for both of you.

For example, if you were a 60 year old female, you can expect to live another 26 years. If your living expenses for a comfortable lifestyle is $50,000 a year, then you multiply $50,000 by 26 to equal $1.3 million. You may need to adjust these figures to account for your own lifestyle taking in living costs, hobbies, holidays and medical expenses. You should also consider the effects of inflation on the cost of living.  In the above scenario for a lifestyle of $75,000 per annum $1.95 million would need to be accumulated.

table of life expectancy
Table of Life Expectancy: The following table shows life expectancy factors used for calculating the relevant number for males and females. The factors are based on the 2005-07 life tables published by the AGA. This table starts at age 50. The full table can be obtained from the AGA or is available on the Publications page on the AGA website.

 

There was a theory that the older you got in retirement the less you need. In one of the great paradoxes of the world one of the major reasons we are living longer is due to improving medical and health care. These allow us to do things we like to do for a longer period of time, but when you slow down later in life these costs are likely to rise. So whilst your living costs MAY drop, they will likely be replaced by increasing medical and health care costs.

You can achieve your retirement plan savings in a number of ways. The intention to receive regular salary increases should not form a part of this plan. Why? – this is not something you can bank on. According to the Australian Bureau of Statistics, the highest age earning bracket is for individuals aged between mid-thirties and mid-forties. Earning more is not guaranteed and even if you are earning a large salary, you are likely to still need to both save and invest for your future.

Going without

The sooner you start to plan for retirement, the more you’ll have, the more retirement lifestyle choices you get. Whether you have millions in assets or none, we can tailor a plan specifically for you that will protect what is most important to you whilst bolstering retirement possibilities. There is never a time too early to start but there can be a time that is too late, severely impacting on our retirement possibilities.

While we are young, preparing for retirement is not something that is front of mind. Being young and having money to spend is fun, but as the quote says, “You can’t be old without money”. 

With professional advice, exploring your lifestyle potential is just the beginning.

Don’t leave it to chance… Achieving more is possible when you know how.

Call us on 1300 27 28 29 today and arrange a coffee and a chat. It’s complimentary!

Source:
Australian Bureau of Statistics, Year Book of Australia 2009-10

This blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this fact sheet can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.

A Guide to Downsizing to Boost your Retirement Savings

We outlined an easy to read 14-point guide that will help you decide if you are ready to make that move.

Guide to Downsizing your Home to Boost your SUPER

Thinking about downsizing? Perhaps your home is too big now that you are becoming empty nesters or perhaps you need the funds to create your retirement lifestyle? Learn our guide to downsizing to boost your retirement savings.

From 1 July 2018, Australian homeowners aged 65 years and older will be eligible to contribute up to $300,000 as a non-concessional (after-tax) contribution to their superannuation. Why would you place the funds in your superannuation? By placing the funds in your superannuation. Then paying yourself a pension from that superannuation all earnings on the investment including Capital Gains are generally tax free. As is the pension you would be receiving.

What you need to know:

  1. The contribution must be from the sale proceeds of their family home that they have owned for at least 10 years.
  2. The family home must be the contributor’s main residence and must be eligible for the main residence exemption for capital gains tax purposes.
  3. Couples will be able to contribute up to $300,000 each to make a total contribution of $600,000 per couple.
  4. Super contributions made as a result of the new downsizing rules are not counted towards non-concessional contributions caps.
  5. An individual taking advantage of the downsizing measures must make the contributions within 90 days of receiving the sale proceeds.
  6. Centrelink currently give pensioners a 12-month exemption under the assets test for the Age Pension.
  7. Australians are only able to use the downsizing contribution (which can be multiple contributions up to $300,000) from the sale of a home once. You cannot use this policy again at a later date.
  8. The existing ‘work test’ for voluntary contributions made by Australians aged between 65 and 74 do not apply to the sale proceeds of the main residence. The existing contribution rules have people in this age group having to prove they had gainful employment for 40 hours within a 30-day period during the year the voluntary contribution was made.
  9. Those 75 years and over and are currently unable contribute to their super are also able to contribute up to $300,000 from the sale proceeds of their home.
  10. The existing $1.6 million transfer balance cap does continue to apply. To find out more about this balance cap, click here.
  11. There is no requirement to purchase another home after they sell their main residence. There is also no restriction of the purchase price or size of a replacement home.
  12. Before accepting contributions under the downsizing scheme, super funds must obtain verification from the ATO that downsizing contributions are from the sale of a family home owned for more than 10 years. Forms confirming this, must be submitted to the super fund before or at the time of making the downsizing contribution.
  13. Downsizing contributions will be counted for the assets and income tests used to determine eligibility for the Age Pension and DVA benefits.
  14. Costs with the sale of a family home can be substantial if high stamp duty and land taxes apply.

The new downsizing rules may not be an ideal strategy for everyone. To find out if this is an ideal strategy to boost your retirement savings to create a comfortable retirement, contact our financial planners on 1300 27 28 29 and get their brains trust working for you.

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This blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this fact sheet can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.