Risk will be higher too

QI am 64 and my wife is 70 and we are both retired. We own our home and have $920,000 in super, $20,000 in shares and about $300,000 in savings accounts getting about 3%. We need to live off the interest. I am thinking of moving more into after-tax super from our savings. It seems that we would get more interest from super than a bank. I have tried to get the greatest interest but there do not seem to be many options. Your advice would be greatly appreciated.

Depending on whether or not you have put your own after-tax money into super in recent times, as you are under 65 you may be able to add to your super. After 65 you will need to pass the work test.

But I am not really sure that this will solve your primary problem. Sure, a super fund should, over time, outperform the 3% bank interest that you get on your savings. This is not because a super fund can earn higher interest. Your super fund should do better because it takes more risk. Depending on your choice of super funds, it could be as much as 60% in shares. This is great in years when markets do well, but your super would fall in the years when markets fall.

If a super fund owned bank term deposits, it would get the same 3% or so you are getting now. So this is all about your views on investment risk. If you move your savings into growth investments, you should earn more but with more risk.

I think your pension income from super, plus interest on your savings, would be around $60,000 tax free. If you need more, then considering more risk is one option, but if this is adequate I quite like where you are now with your own home, a nice pot of super that will own a mix of investments and some secure but low-interest cash.

It really does get down to your attitude to risk!