Welcome to our Four Part Super Series covering starting, building, planning and receiving your superannuation retirement savings.
Part 4 – Retirement & Estate
Welcome to our final part in our four part series. This month we are looking at those that are now retired and looking to ensure everything is in order and any final strategies are put in to play where possible.
Welcome to retirement!! What a wonderful time of your life this is. Hanging with the grandkids, travelling (as best as you can in these times), spending time with friends and family…..all those precious moments every day.
A lot of what we cover today may have already been addressed but it is still important to revisit and review. Always review!
The below are the main areas we will address today:
- Eligible contributions in your 60s and beyond
- Re-contribution strategy
- Pension commencement
- Estate planning
- Winding up your SMSF
Eligible contributions in your 60s and beyond
It is important to remember that while you are still working generally speaking you can still contribute to your SMSF. This might sound obvious but to some it isn’t and it is a real opportunity to put those excess funds you may have into super if appropriate. You may have little or no debt so boosting your super can be easier than it may have been in the past.
Here is how:
• Standard employer contributions can be made by your employer to your super fund while you are still working. This is regardless of your age.
• Additional personal contributions (either concessional or non-concessional) can be made to your super fund until your turn 67. Once you turn 67 you must ensure you meet the work test – read here for more info on the “Work test age lifted.”
• Downsizer contributions can be made from the age of 65 onwards. Check out our blog here to find out whether you are eligible to make this type of contribution.
• As you may have little debt and only require money for living expenses you may want to look into salary sacrificing (if you don’t already.)
So as you can see there is still plenty of opportunity to make contributions to your SMSF well into your 70s. Just make sure it is right for you.
You may not have heard of this before but at this stage in your life it may be very handy to have a look into. Effectively it involves drawing out from your super (as either a pension or lump sum) and contributing it back in. The benefits flow down to your beneficiaries in the event of your death by reducing your taxable component and converting it to tax free. It requires specialist advice so be sure to contact your trusted advisor before proceeding.
If you have not already started a pension from your super fund it might be time to start thinking about it. Pensions have many functions including supplementing your income while you wind down from working fulltime, providing for your lifestyle and reducing the tax you pay inside your super fund. If you have an SMSF you should think about funding these payments so get in touch with us to review your personal situation.
SMSF Estate Planning
This is a massive topic and is important at all life stages. The main areas to consider (in addition to the re-contributions strategy mentioned above) are:
• Reversionary pensions
• Death benefit nominations
• Your Will
• Succession planning for those with an SMSF
Reversionary pensions are where your pension simply reverts to your beneficiary in the event of your death. There may be benefits to this estate planning tool such as reducing the need to sell down assets or rushing to pay lump sum death benefits. These supersede any death benefit nominations that may be in place. Read more here about Reversionary Pensions and How They Operate.
Death benefit nominations direct your super to a beneficiary in the event of your death. There are different types of nominations and one type may be more suitable to you than another. Read here to understand more about these.
Your Will is a document that ensures your assets are dealt with how you wish when you pass away. It covers almost all of your assets in your estate EXCEPT your super. This is an often-unknown fact so getting the right advice is crucial. Find out more about Your SMSF vs Your Will here.
Succession planning is usually something you associate with business owners but it also applies to your SMSF. Who takes over as trustee when you are gone? Do you understand the difference between individual trustees and a corporate trustee? These are all questions you should be asking yourself now. See our table at the end of this blog for more information.
It may be time to start considering whether you still need your super (whether it be an SMSF or other super fund). There may no longer be any tax benefit and managing it can be time consuming. Speak to a professional to discuss this possibility.
So that is a lot we have covered over our Four Part Series that we hope has got you thinking about what you can be doing to improve your personal situation. Contact us here to book your personal review and get your SMSF planning on track.
This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.