Super Contributions

Not idea if still correct
Why you only need $275k in super to retire

 

Thank you -seeing those figures is very helpful.

Originally my FP wanted to leave everything in my Accumulation account (and use my non-super shares for income), but then you mentioned that it was best to switch to a Pension account. After discussing your reasoning with my FP, he agreed that it would be best to switch to a Pension account.

I will still need to keep an Accumulation account as I need to get in both concessional and non-concessional contributions over the next several years (and they can't go into a Pension account). I was thinking of keeping my super in Accumulation phase until I've made all my contributions (so for a few more years). Do you think that's a silly idea? The alternative would be be switching to Pension phase asap and then maintaining my Accumulation account (I believe that's what my FP has in mind).

My only concern is that the minimum amount I will have to withdraw will be greater than the income received (particularly since the % minimum you need to withdraw increases with age).

We are hopefully finalising tomorrow which option we're going to go with for my super. I was leaning toward Australian Super (balanced option)/Member Direct option, but I'm pretty sure my FP is going to advise I invest in a Vngd diversified index fund (not the Vngd industry fund, as that's not available yet, but rather a Vngd diversified fund on a wrap platform). I'm not really fussed either way -I just want to get it invested.

 

As it's nearly the end of May it's probably worth putting $100k in right now, then $330k on 1st July using the bring forward rule (cap has increased to $110k from 1st July), and then switching to pension mode. Then June 2022 take out your minimum 4%, keeping the funds there as long as possible, then 4% again in June 2023 and so on. You won't be able to make any non-concessional contributions to an accumulation account until July 2025 as you have used the bring-forward rule. It might be possible in July 2025 to for example do a roll back to accumulation, combine with any other accumulation account you have, make another non-concessional contribution, and then switch the lot back to pension mode. Basically schedule your super for a grease and oil change in July 2025. The rules could probably change by then.

Actually I had the figures to hand - I'm getting close to retirement age so have been doing some calculations as to what I should do.

 

Yes, that's exactly what I plan to do: $100K before end of June and then $330K after 1st July.

My FP has informed me otherwise. He said I will be able to make my non-concessional contributions as described above, and then I will also be able to make a $25K concessional contribution + $50K carry-forward concessional contribution right now. On the 1st of July, he said I will be able to make another concessional contribution of $27.5K. He said I'd then be able to make a concessional contribution of $27.5K every year upto age 67. Is he wrong?

Yes, hopefully the rules will change in July 2025 and I may be able to get in some more non-concessional contributions.

Thank you.

 

An accumulation account with $0 balance poses no issues. There is no need to maintain an accumulation balance except if the law prescribes it. Accum accounts can be opened and closed at whim.

 

Is the member eligible to use the bring forward rule ? This is why guiding contributions, establishment of pensions etc is licensed financial advice.

I would encourage anyone considering such a strategy to obtain personal advice first.

 

Yes, I am (according to my FP).

 

Your FP is not wrong - I wrote that you can't make non-concessional contributions once you have used the non-concessional cap. You can of course also make concessional contributions subject to caps and eligibility.

 

I'm not licensed to give advice, only sharing my experiences and thoughts on the matter, so the member can use these as seeds for discussions on her own situation. Clearly the member is talking to her FP on these matters, I assume that the FP is licensed.

 

I really appreciate you sharing your experiences -it helps me ask better questions and improves my understanding. Yes, my FP is licensed and I always discuss any questions that arise from these forums with my FP.

I decided to go with Vanguard's balanced index fund for my super and my FP has confirmed that we will be switching to a Pension Account. He said we will also hold an Accumulation account and continue to refresh my Pension Account periodically.