First Question
Hello Craig. I am 76 years old and have been living off of my bank money since I retired two years ago. I still have $1.8 million in my industry fund super in an accumulation account. If shares are good, I can make little over $100,000 a year with such funds. If I put this cash into a pension mode, it pays me the required 6%, which is my yearly salary, considering my age. Given that 6% is too much money for a single person to handle, is it not a wise investment to let it grow while I deplete my $150,000 in savings? Could I put extra money back into the accumulation stage?
You are right that, depending on your age and account balance, you must take out a minimum amount annually if you convert your super to a pension. Take a look at the table below.
You must withdraw 6% of your account balance (based on the initial amount and the balance as of July 1st of each year) since you are 76 years old.
You cannot put the money back into your super because you are over 75 if this brings in too much money for you.
The main benefit of transferring money from super accumulation to a pension is that pension earnings are exempt from taxes. On the other hand, super accumulation earnings are subject to 15% tax.
Converting the majority of your super to a pension and taking the minimum amount depending on that sum is one tactic you might consider. The balance is left in super accumulation.
Second query
Because of my income, my spouse is on a part-aged pension and I work part-time. Since we will be traveling for three to four months, we intend to sell our house but not purchase a new one. My superannuation amount is $480,000 (I am 63), and we anticipate making about $500,000 from the sale of the house. While we are traveling, I will most likely accept my long service at half pay. I am aware that a person's primary residence is not considered an asset, but what about the time in between selling and purchasing a new residence? Would that make our assets too much for my husband to be eligible for an aged pension? How may this short-term asset rise be appropriately offset? (We would hate to be cut off entirely, but we are not too worried about a temporary total loss of the pension. The application procedure is really difficult.
Yes, the age pension application process can be a bit of a hassle for many people. Nowadays, some businesses offer to complete the forms for you; however, there is a fee.
Concessions for those moving or selling and building a new home have long been offered by Centrelink.
The good news is that beginning of January 1, 2023, the concessions have been generously increased.
The designated funds are not included in the assets test if you plan to buy or construct a new house within 24 months of selling your current one.
For instance, $600,000 is not included if you plan to purchase a new home for $600,000 after selling your previous one for $800,000.
Furthermore, for these funds, the income test only applies the lesser deeming rate of 0.25 percent annually.
Reducing the effect of selling and purchasing a new residence on Centerlink benefits is the goal of these modifications.
Until you reach pension age (69) your super is not evaluated. Once you have sold your house and begun taking long service leave at half pay, it is crucial that you inform Centrelink with your financial situation so that your spouse receives the appropriate amount.
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