Anything and Everything about Superannuation

Nah I wanna be Bob the Builder and teach myself how to do rennos. Or seduce a tradie to do it for me ha!

 

Now ya thinking!
Just budget for beer and get wholesale account.
And ya gonna need a blue cattle dog.

 

You will be in a far better position if you pay down your mortgage from either salary or other investments rather than using your Super.
Think of Super as icing on the cake, not as the ingredients of the cake.

 

A six month 'holiday' aka retirement in Oz?

 

I don’t have any other investments and my remaining working life is almost certainly insufficient to pay it down from salary. When I divorced, my ex got the house, I got the super, so the intention was always to use it to buy a house via repaying the house mortgage.

 

That is a HUGE statement to make without knowing the details of this persons finances, investing temperament etc. From an assets under management approach you are diversified across shares and direct property with higher total assets using super. You would have higher leverage though, but not as much as you might think when you include shares and PPOR together in your total financial worth.

Paying down the mortgage means you are neglecting shares to focus your lower total financial worth on direct property with lower leverage. Personally I'm much more comfortable with higher leverage split across shares and direct real estate than lower leverage in just a PPOR. For me it's better diversification, more access to income and overseas producing investments and helps me sleep at night.

Leverage is a fantastic thing when used conservatively.

 

Let the debate begin - again.

A tale of two of my relatives when superannuation was paid out on retirement.

One retired with a very modest amount of superannuation, invested it in shares so received some supplementary income as well as the age pension. Lived quite well and enjoyed his days even traveling overseas once.

The other retired around the same with about 10 times the amount of the other and blew the lot within a few years. Did he whine about how hard it was for him.

Two ends of the spectrum and I don't think it is really any different today apart from trying to get one's head around the ins and outs of superannuation as it is today is akin to wading through treacle.

 

It's human nature - some will play with the hand that they are dealt others will see it as a windfall and blow the lot (just like a big lotto win etc) - absolutely nothing to do with getting your head around super.

If the temptation is to blow it, they will regardless whereas if the person is more frugal they will deal with it as they always have - carefully.

 

I was referring to the taxability of an income account within Super. I forgot Preservation Age is different for different ages.


Please read the Transition to Retirement Income Stream Member Booklet before deciding if this is the right product for you.

Once you've set up a transition to retirement income stream, remember:

• You can’t withdraw your whole super balance as a lump sum.
• You can withdraw a minimum of 4% and a maximum of 10% of the account balance into a TRIS income stream each year.
• Drawing down from your super could mean there is less to access when you fully retire.
• From 60 years of age you don’t pay tax on the pension payments. If you are under 60 years of age pension payments do create taxable income but this is at concessional rates.
• A maximum investment earnings tax of 15% is applied.

 

Thanks Angel. Hmm I wonder if the rules change for ex-pats once we hit retirement and try to use our super?

 

I have no idea about super for expats, but it will be clearly stated on the ATO website and on your fund's website. I understand expats get treated harshly by the tax office as you are "out of sight" of the general public and a low voting group.

 

There are no different Australian rules for expats regarding super once retired.
- You can just leave it in accumulation mode, and withdraw what you need, when you need it
- You can move it to pension mode, and withdraw the minimum (starts at 4% pa).
I'm assuming you don't have a SMSF. Expats shouldn't try having an SMSF, if an SMSF becomes a non-resident fund the tax becomes severe.

 

Thank you so much Mr Bear. That is one bright bit of news. This forum has been so helpful. I think I'm seven years out from moving to a TRIS I think (leave in accumulation mode and draw what I need). No I'm small fry. And later I will move to a tax-free or low tax country. Countries like Georgia for example don't tax my super. As I will have been an expat for more than the standard 6 or 7 years it will bump me out of a lot of things. Pension I never planned to take. But for also doing clever tax minimization strategies on resident or non resident status. I think I will just continue to put a lot into super, pay down a bit on IPs then in about 7 years sell them up and dump it into my Super after the tax man has devoured a huge chunk of it.

 

Thank you. Yes I know about caps and limits. I don't fit into the category for downsizer, living in etc as I'm an expat for six years and have no ties to there. I will continue to live and work in China unless another country can best the deal I'm on here (highly unlikely). I lived in one IP for two years when I was living and working in one city before finally leaving Australia to career change into teaching and living internationally. I'm single and no ties to there just used to move around and live wherever for work as a regulations person. No clever work arounds. Not falling into the category of someone who has done all the normal usual things and life standard path

 

Not at all. I really appreciate all the answers and comments and this platform in general. Been wonderful for self-education. I can learn so much from the kindness and generosity of others in their knowledge.

 

so another question... I'm thinking of moving my super to the cash option in my investments switch selection. I want to sit on things until after the US election. But all my Google research shows articles from funds saying its better to sit it out as the market always bounces back yadda yadda. I'm thinking to myself they just don't want to be bothered with actually doing the switching work. I just don't want to take any more hits as the last 4 weeks the US market has dragged things down and I don't see why I should have to ride the market down. But of course I"m the worlds worst share trader that's why my money sits in super and I don't have a trading account anymore.
So the question is: Leave as is in growth option or switch to cash and monitor closely?

 

@BunnyXiao - review the movements in the share market over the October/November where each of the previous 4-5 US elections were held.

How did the markets fare?

What else was making news at these times?

 

Another option, just go halfway. 50% Cash, 50% Shares/Property.

Trying to predict whether the election will lead to higher or lower share prices, is flipping a coin. Just stick with whatever allocations you are comfortable with over the long term and leave it there.