I have $1.4m - is that enough to re­tire on?

Sunday Mail - - BUSINESS DAILY -

Achiev­ing a “com­fort­able re­tire­ment” is some­thing that varies from per­son to per­son and cou­ple to cou­ple. Ul­ti­mately, it comes back to how much in­come you need to meet your liv­ing costs (food, util­i­ties and so on) as well other in­ter­ests (such as hol­i­days).

For those over 65, an in­vest­ment in an al­lo­cated pen­sion will pro­vide a min­i­mum in­come of 5 per cent of the ac­count bal­ance. This would be $47,500 with your cur­rent su­per bal­ance.

As­sum­ing an­other 2.5 per cent re­turn on the term de­posit, you would have to­tal in­come of about $56,000 tax-free each year.

I’ve ig­nored any in­come from your run­ning ex­pense ac­count. The ASFA Re­tire­ment Stan­dard bench­mark sug­gests a cou­ple needs $43,695 a year for a mod­est life­style and $60,063 for a com­fort­able life­style.

To that end, I would sug­gest that you prob­a­bly have enough funds for your re­tire­ment. It would be ap­pro­pri­ate to meet with a fi­nan­cial plan­ner to dis­cuss your sit­u­a­tion and to en­sure you have the right set-up for your re­tire­ment. I would also check that your TTR pen­sion has been changed to a stan­dard al­lo­cated pen­sion to en­sure that you are not af­fected by the tax change that oc­curred on July 1. Yes, you would gen­er­ally ap­proach a share bro­ker to fa­cil­i­tate the dis­posal/sale of shares. Al­ter­na­tively, you could sign up to an on­line broking ser­vice. The lat­ter op­tion could be slightly cheaper but you need to do ev­ery­thing your­self.

De­pend­ing on the value of the share port­fo­lio, you may need to meet with your ac­coun­tant prior to start­ing the sale process to en­sure there are no cap­i­tal gains tax im­pli­ca­tions (CGT).

It may be, to min­imise CGT, that you sell the shares over a cou­ple of fi­nan­cial years. A granny flat in­ter­est is where you pay for the right to live in a spe­cific home for life. You can­not be the le­gal owner of the home.

Cen­tre­link may ac­cept a granny flat in­ter­est if it is not in writ­ing but they do sug­gest you get a solic­i­tor to draw up le­gal doc­u­men­ta­tion to prove own­er­ship and con­firm the right to live in the home for life.

There is a “rea­son­able­ness test” that Cen­tre­link ap­plies when con­sid­er­ing how much has been paid for the granny flat in­ter­est.

I am not aware of any GST obli­ga­tions that you would have with the ex­change of funds from your mother-in-law to your­selves un­der the granny flat pro­vi­sions. Un­der so­cial se­cu­rity laws, you are con­sid­ered to be a cou­ple if you and the per­son with whom you are hav­ing a re­la­tion­ship are mar­ried or in a reg­is­tered or de facto re­la­tion­ship.

Sev­eral fac­tors are used by Cen­tre­link when as­sess­ing whether you are in a re­la­tion­ship. These can in­clude the fi­nan­cial as­pect of your re­la­tion­ship, the na­ture of your house­hold, so­cial as­pects of the re­la­tion­ship, if you have a sex­ual re­la­tion­ship, and the na­ture of your com­mit­ment to each other.

Sim­ply liv­ing apart may not nec­es­sar­ily mean you are a sin­gle per­son un­der so­cial se­cu­rity rules.

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