Super in your 60s

For most Australians, their 60s is the decade that marks retirement.

For some this means a graceful slide into a fulfilling life of leisure, enjoying the fruits of a lifetime of hard work.

However, for many it means a substantial drop in income and living standards.

So how can you make the most of the last few years of work before taking that big step into retirement?

Last-minute lift

If your super is looking a little on the thin side there are a few ways to give it a boost before retirement.

• Make the most of your concessional contributions cap. Ask your employer if you can increase your employer contributions under a ‘salary sacrifice’ arrangement. Alternatively, you can claim a tax deduction for personal contributions you make. Total concessional contributions must not exceed $25,000 a year, although from July 2018 you might be able to carry forward any unused portion of this cap for up to five years.

• Investigate the benefits of a ‘transition to retirement’ – TTR – income stream. This can be combined with a re-contribution strategy that, depending on your marginal tax rate, can give your retirement savings a significant boost.

• Review your investment strategy. A common view is that as we near retirement our investments should be shifted to the conservative end of the risk and return spectrum. However, in an age of low returns and longer life expectancies, some growth assets might be required to provide the returns that will be necessary to support a long and comfortable retirement.

• Make non-concessional contributions. If you have substantial funds outside of super it might be worthwhile transferring them into the concessionally taxed super environment. You can contribute up to $100,000 a year, or $300,000 within a three-year period. A work test applies if you are over 65.

• The 60s is often a time for home downsizing. This can free up some cash to help with retirement. The ‘downsizer contribution’ allows a couple to jointly contribute up to $600,000 to superannuation without it counting towards their non-concessional contributions caps.

Hello aged pension

One reward, just for turning 60, is that any withdrawals from your super account will be tax-free. This applies to both lump-sum withdrawals and income-stream payments. Depending on the preservation status of your funds you might need to meet a condition of release to access your superannuation.

Based on your date of birth, somewhere between age 65 and 67, you’ll reach age-pension age. The age pension is subject to both an assets test and an income test and some advanced planning can boost your eligibility for the pension. For example, the family home is exempt from the assets test. Releasing cash by downsizing might reduce your eligibility for the age pension.

Get it right

This important decade is when you will make the key decisions that will determine your quality of life in retirement. Those decisions are both numerous and complex.

Quality, knowledgeable advice is critical, and wherever you are on your path to retirement, now is always the best time to talk to your licensed financial adviser.