There’s no easy an­swer to how much is enough

Mercury (Hobart) - - MONEY SAVER - NOEL WHIT­TAKER

I READ your ar­ti­cles with great in­ter­est. How­ever I am of­ten left won­der­ing what as­sump­tions un­der­pin your pro­jec­tions. In par­tic­u­lar, do you en­vis­age spend­ing down all cap­i­tal over re­tire­ment or leav­ing it in­tact?

How much any­body needs for re­tire­ment is ex­tremely dif­fi­cult to work out be­cause it de­pends on such fac­tors as the state of their health, how much is spent on din­ing out and trav­el­ling, how long they live, and how of­ten the kids put their hand out for help.

To make it more com­pli­cated, the age pen­sion in­creases as the as­sets run down. I rec­om­mend a tar­geted cap­i­tal sum of 14 times your ex­pected ex­pen­di­ture but this is a very rough guide. This is why you should be guided by your ad­viser, and at least every year have a meet­ing to see if you need to re­vise your strate­gies. I AM 66, work 38 hours a week and in­tend to keep work­ing for the next cou­ple of years. I note an ar­ti­cle by you on su­per­an­nu­a­tion changes from 1 July, 2017 that stated to be el­i­gi­ble to claim post-tax su­per con­tri­bu­tions as a tax de­duc­tion I would have to be un­der 65. I work 38 hours a week, there­fore pass­ing the work test, I pre­sume any tax con­tri­bu­tion I make to my su­per ac­count will tax de­ductible. Cor­rect? Yes, pro­vided you do not ex­ceed the caps. YOU re­cently ex­plained that an in­di­vid­ual with more than $1.6 mil­lion in su­per­an­nu­a­tion can no longer make any con­tri­bu­tions to su­per. If the in­di­vid­ual is still work­ing, does that mean that the em­ployer no longer can make the re­quired con­tri­bu­tions to their ac­count ei­ther? If that is the case, does the em­ployer just keep that money or would they pay it to the em­ployee in an­other form?

Once a per­son has more than $1.6 mil­lion in su­per­an­nu­a­tion they are not al­lowed to make any non­con­ces­sional con­tri­bu­tions. How­ever, em­ployer con­tri­bu­tions are con­ces­sional con­tri­bu­tions, so ex­tra con­ces­sional con­tri­bu­tions are al­lowed up to the cap of $25000 a year. The cap in­cludes the em­ployer con­tri­bu­tions. MY wife and I have a self­man­aged su­per fund. When one of us dies, you have ad­vo­cated the sur­vivor re­move their own bal­ance, as well the now in­her­ited funds from the fund to avoid the 17 per cent “death tax”. Can the funds be trans­ferred out of the fund as shares?

My rec­om­men­da­tion to con­sider ex­it­ing the fund was if death was im­mi­nent and a large death tax would be payable be­cause the funds were be­ing left to a non-de­pen­dent. This is re­ally a mat­ter for the fam­ily.

But, as­sets can be trans­ferred in-specie – just make sure you keep some cash in the funds bank ac­count to smooth out any fluc­tu­a­tions in the share price on the day of trans­fer. Also, be aware that this tax ap­plies only to the tax­able com­po­nent of the fund.

Noel Whit­taker is the au­thor of Mak­ing Money Made Sim­ple and other fi­nance books. His ad­vice is gen­eral in na­ture and read­ers should seek their own pro­fes­sional ad­vice be­fore mak­ing any fi­nan­cial de­ci­sions. Email: noel@noel­whit­

This tax ap­plies only to the tax­able com­po­nent of the fund

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