What you should know about super, retirement, and selling a property

What you should know about super, retirement, and selling a property

You might have heard the news stories recently about superannuation pro Jeremy Cooper saying $1 million isn’t enough for a comfortable retirement.

Whether or not his calculations were valid is a debate for another day.

But it got me thinking… how would all this fit in with property, super, retirement, and so on? Click through for the facts!

What you should know about super, retirement, and selling a property

Jeremy Cooper, the chairman of retirement income at Challenger, recently made the news when he said that $1 million isn’t enough for a comfortable retirement anymore.

This was an interesting statement, and it got me thinking about everyday property owners and their prospects for retirement.

Are we better off selling our properties before retirement, or should we hang onto them? What about tax? What about pensions?

Here are some quick facts to help clear up the basics.

  • Get qualified advice before doing anything!

Before we get stuck into anything, it’s important to make sure we set ourselves up with a quality financial advisor or accountant.

The information below is only a basic outline – everyone is different, so if you’re thinking about pursuing anything mentioned here, talk to a financial expert first!

  • Selling and putting the proceeds into your super

The good thing about selling and putting your money into your super is that once you turn 60 and retire, any income from your super is tax free. Hooray!

This means you can have a larger super nest egg to fund your lifestyle once you retire, and no tax would be payable on any interest or earnings this money makes.

From July 1st this year, the contributions cap on a lump sum payment into your super will be raised from $450,000 to $540,000. This is the amount you can contribute, per three-year period if you’re under 65.

What you should know about super, retirement, and selling a property

  • Selling investment properties

If you have (or plan to have) one or more investment properties, selling will help to put more into your super, with the added benefit of your returns being more reliable than rental income and the no associated costs with keeping your investment property running smoothly.

On the other hand, if you wait until you’re retired to sell your investment property, you will need to pay tax on the sale.

  • How this affects your pension

Government pensions are means tested, so any extra earnings over your pension will reduce the amount you get from the government.

You’ll need to talk to a financial advisor about all this to understand all of the implications.

  • Selling and renting

If you decide to sell and rent, you’ll have all that money in your super, plus you’ll be assessed as a non-property owner by Centrelink. This will give you a higher limit on the assets you’re allowed before you incur tax or your benefits are reduced.

  • Staying in your property

If you don’t think you’ll want to downsize after retiring, then you’ll only have your existing super (plus any government pension you are entitled to) to live off.

This doesn’t leave you with any real investment options other than what was already available to you before you retired.

  • It’s all about risk

Super is a pretty low-risk option for saving retirement money. Property investment has bigger potential returns and risks, but again it’s best to get it all done before you retire so that you can put the income into your super and pay less tax.

If you want to continue investing in property, look into investing through a fund – this combines the tax breaks of super with the investment potential of property.

Whichever way you go, as long as you have some kind of income-producing asset after retirement, you won’t need to worry about draining your savings.

If you’d like to know more about selling a property to fund your future retirement, contact Madeleine Hicks Real Estate on 07 3355 6845 today.

This information is intended as a basic overview. If you are thinking about pursuing anything mentioned in this article, seek professional financial advice.

2 replies
  1. Avatar
    Marco says:

    First of all I would like to say terrific blog! I had a quick
    question in which I’d like to ask if you don’t mind.
    I was interested to find out how you center yourself and
    clear your thoughts before writing. I’ve had trouble clearing my thoughts in getting my thoughts out there.
    I truly do take pleasure in writing but it just seems like the first 10 to 15
    minutes are lost simply just trying to figure out
    how to begin. Any ideas or hints? Cheers!

    Reply
    • Madeleine Hicks
      Madeleine Hicks says:

      Hello Marco, the first step is just to start. Put down some thoughts, bullet points, random thoughts and then just do it! There is no secret recipe, I wish there was. Good Luck, Madeleine

      Reply

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