Anything and Everything about Superannuation

Should super be treated the same as your investment strategy and allocation preference that you use outside of super?

Just curious what the general concensus is re investing in super? I am currrntly invested in the ANZ smart choice super lifestages portfolio mix. As per the image. Where the asset allocation adjusts with age becoming more defensive as you approach retirement etc.

Do members currently opt for a similar default option or prefer to invest in 100% equity allocation. I assume most members are fully invested in 100% equities outside of super, so is there general consensus to invest within super the same way?

 

Peter Thornhill would say be wary of this. Most of your compounding gains occur in the last couple of years of your accumulation. By gradually shifting to cash/bonds you run the risk of running out of capital (not advice).
There's plenty of stats out there discussing the performance of the ASX over the long term.

*EDIT* Also I don't like the idea of a computer program buying and selling units based on your age.

 

Yep tend to agree. I wanted to gather some more info and the thoughts of members before changing my allocation to 100% equities etc.

So when I’m drawdown stage during retirement are you forced to withdraw a certain amount based on your balance from the beginning? I ask because if there was a crash of some sought during retirement you may need to adjust your withdrawal amount. Or is the withdrawal amount set in stone from the start due to the pension implications?

 

We invested aggressively inside super until close to retirement. We are now retired and have 5 years cash/near cash excluding dividends. Our dividends are enough to cover our mandated 4% annual payment from SMSF. The rest of our super money is still invested in shares.
The ANZ retail product you have is ok for a young person and has low fees. It is probably not such a good or cheap fund once it starts increasing fixed income and bonds while decreasing shares as you get older. Just my 2c

 

It is a percentage based on age. Have a look at money smart web site for more information. Account-based pensions | ASIC's MoneySmart

 

Cheers will check it out. I guess what I’m trying to determine is do we have control over what we can withdraw based on our age to death? If the super is invested 100% equities With no defensive assets then we would need a cash reserve to utilise if the market went way south etc. to ensure we didn’t run out of money before death. The same strategy used outside of super.

 

No you do not have direct control. At set ages you MUST withdraw set percentages of funds. Not set dollar amounts. At 60 it is 4%, At 65 it is 5%, at 75 it is 6%, at 80 it is 7%...……….95+ is 14%

 

Ahhh interesting. Thanks

 

No problem, Its all in the link above. Current retirees over 65 with lower super balances are topping up their super payments with part government pensions. It would be a brave person who would rely on that in the future

 

Peter Thornhill's portfolio is also bringing in around $400k of dividends each year

 

From memory Peter didn’t really start investing seriously till around 40. He had a reasonably high paying job but he was the sole breadwinner and they raised three children. However they were relatively frugal and excellent savers.

But not sure about most of the accumulation gains occuring in the last couple of years of same. The more important point is that compounding is an amazing thing the longer you can give it. So the message is to start early. Overtime as the asset base increases compounding then will certainly start yielding great reward.

 

While there is a required withdraw rate at each age during retirement, you could reinvest the money you didn't need, either in another super account, or in investments outside super.

 

And the amount to be withdrawn is reset each year on 1st July depending on the account balance which obviously fluctuates with market conditions.
Marg

 

You can only recontribute to super if you meet certain conditions eg: work test.

 

I think, and I stand to be corrected, it could be there are a couple of wrinkles.

I understand a person, under the age of 65, can make concessional and non-concessional contributions to superannuation. In the event I am correct, it is possible to take the account-based pension and then re-contribute as either a concessional or non-concessional.

This would include those whose received income from:

• salary and wages
• a personal business
  
• investments
• government pensions or allowances
• super
• partnership or trust distributions
• a foreign source

So should one be fortunate enough to have sufficient income outside of super and is in pension phase, you could take the mandatory pension (4,%, 5% whatever), re-contribute, then claim it, if desired, as a personal tax deduction.

I know of a number of former public servants who receive a defined-benefit pension from the CSS, and have an SMSF, who did this. Nice work as they also got a 10% rebate of the tax payable on the CSS pension once they reached 60 years of age.

 

After a divorce my ex got the house and I got the super/cash. Almost bought in Sydney then the market took off so have been renting for a few years. I am 55 so can access my super in four years (five years more likely as then withdrawals are tax free). Money in super is all cash as I am bearish on other asset classes and intend to use some of the super to buy a house. This will be either a cash purchase once I hit 60 or potentially repaying a loan I take out before then. Not sure how much borrowing power I will have as spend most of my income and so may have to wait until 60. Hopefully Sydney house prices continue to fall.

My five kids range from 4 to high school age so not sure what size house to buy as ideally would like the house to be for retirement as well. Hoping some of the kids decide to move out for uni

 

I believe that you can make a $25,000 concessional and a non concessional contributions of $100,000 from ages 65 to 74 if you meet a work test.

Work test

If you are 65–74 years old, you need to satisfy a work test in each financial year that a voluntary super contribution is made to your fund.


The work test requires you to be gainfully employed. To satisfy the work test, you must work at least 40 hours during a consecutive 30-day period each financial year in which the contributions are made.

 

Just went 95% cash in Super - Share Market Correction

For quite a while I have been thinking a lot about the matters raised in the thread.

First a disclaimer. Whatever action or approach people take which suits them, assuming it is lawful, is their business. Their money, their future, their choice. I've no right to make any judgement in that regard.

I consider the original intention of superannuation for as many people as possible was a darn good Government decision. Problem as I see it is since it's implementation it's been stuffed up through through poor government policy directions. Nothing new in that. Seems to be the raison d'être for the continued existence of misGovernments now.

It wasn't all that long ago fortunate individuals could make a concessional contribution of $100k pa to super. Very few were able to but those who could dropped in a massive amount to super, especially if their spouse was in the same situation. You don't need a PhD in mathematics to work out how much would be in super after five or so years at that rate after tax.

Even when the amount dropped to $50k pa, it was still very good for some. What was done with the $50k left who knows but it wouldn't surprise me if the residue after personal tax was deducted it was put in as a non-concessional amount.

So overall, those fortunate few were able to two-stage turbo-charge their super. And there was the opportunity at one stage to put $1M in as non-concessional. Yep, certainly was stuffed up as if you needed further evidence.

Those days are well and truly gone I think but the wish hasn't and now it appears the $1.6M is the Holy Grail.

I don't think a great many will ever achieve $1.6M without adopting a risk attitude.

If you are a salary earner on $70K pa, $6,650 is the employers SG requirement. A far cry from the $25k.

I don't see many will be able to salary sacrifice $18,350 if your on $70k pa as your after-tax pay is $54,833 pa. Sure you could salary-sacrifice $18,350 but your tax-home pay will be reduced by $12,300 pa. I don't expect many are prepared to, or are able to, live on $42,500 pa to pay for rent/mortgage (as if), food, and all other bills.

So the regular punter will probably have to plod along and look at the unobtainable Holy Grail and give a big sigh. Assuming all goes smoothly in life and no hiccups occur. Buckly's rules applies there

For those who can contribute $25k pa to super it'll take a lot, lot longer to get near that $1.6M fund earnings net of fees and taxes notwithstanding. So if the objective is the Holy Grail, it a question of how. I reckon that is where the trading/market timing approach will likely to be come more and more common. Fingers and legs crossed then hang on for the ride. It'll be interesting.

 

If reading this correctly you were 51 when your last child was born. Wow!
The home you rent must be of significant size to house the 6 of you.

 

Yes 51 - just heard of a doctor friend who had one at 61 so I don’t feel quite so old.

I met someone after the divorce, thus the four year old. Rent a five bedroom place at the moment. The big question is whether to buy a larger place or buy something more suitable for retirement and squeeze the kids in until they leave home.

The more we squeeze the quicker they leave