Annette Sampson’s excellent financial milestone guide from the Sydney Morning Herald last week features commentary from ipac’s very own technical specialist Colin Lewis who provides some interesting financial insights for baby boomers to consider during retirement.
Highlights of Lewis’s commentary is captured below:
holding off on starting a pension in your 50’s:
“it’s worth seeing whether you can afford to hold off your first pension payment until your 60th birthday to ensure the payment is tax-free.
for the over 65’s
Once you turn 65, you have to meet a work test before you can make further super contributions. This requires you to have worked for 40 hours in a consecutive 30-day period during the financial year.
Lewis says that the limits on how much you can contribute are based on your age at July 1. From age 65, you are limited to non-concessional or after-tax contributions of $150,000 a year. You are no longer eligible to ‘‘bring forward’’ the next two years’ contributions to make a one-off contribution of $450,000. But if you’re 64 on July 1, you are eligible to use the bring-forward rules – even if you turn 65 later that month.
While you can continue to receive compulsory super contributions, you can no longer contribute to super after 75.
Your final contribution has to be made within 28 days of the end of the month when you turn 75. So if you turned 75 in June, you’ll need to contribute by the 28th of this month.
The minimum amount you are required to draw down from your pension also increases. From 75 to 79 it is 4.5 per cent; from 80 to 84 it is 5.25 per cent; from 85 to 89 it is 6.75 per cent; from 90 to 94 it is 8.25 per cent; and once you turn 95 it is 10.5 per cent.
If you haven’t done it already, this is also a good time to think about matters such as estate planning.
For further information speak to your ipac financial adviser or contact us on 1800 626 881 to arrange a free, no obligation consultation around your financial situation, goals and aspirations.