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Ask the Expert: Retirement calculators, transfer of assets and TTR

Financial adviser Craig Sankey answers your superannuation and other finance questions each week, and today delves into transitioning to retirement.

Jul 10, 2024, updated Jul 10, 2024
The Association of Superannuation Funds of Australia has a rule-of-thumb calculation that says a home-owning couple aged between 67 and 84 would need an income of $71,723.56 for a comfortable retirement.

The Association of Superannuation Funds of Australia has a rule-of-thumb calculation that says a home-owning couple aged between 67 and 84 would need an income of $71,723.56 for a comfortable retirement.

Question 1

I am 57 and my wife is 58. How much super do we need to have to obtain an income of $60K per year each after retirement at 67yrs.

You have stated you want to receive $60,000 each. Therefore, I have looked at a combined income of $120,000 per annum after tax.

If you were retiring today and already aged 67, then you would need a combined savings of approximately $1,750,000 ($875,000 each).

This assumes you are comfortable drawing down on your funds and that they run out at age 92. The Moneysmart retirement calculator in this instance shows you both receiving a part age pension about 10 years after retiring, due to you drawing down enough of your super.

The above assumes everything is in today’s dollars (as well as making a bunch of other return assumptions).

But as we know inflation increases the price of everything and future retirees need to factor that in.

As an example, using the RBA inflation calculator, what you could buy for $120,000 10 years ago, you would now need $155,855 today.

Assuming an average inflation rate of 2.50 per cent per year, which is roughly what the RBA targets, you would need approximately $2,240,000 in 10 years’ time to buy the equivalent of $120,000 per year in today’s money.

It can all get a bit confusing.

I suggest speaking with a financial adviser as they tend to have sophisticated modelling software that can model different scenarios and help refine your goals further.

Question 2

I’m 67 and my 21-year-old grandson lives with me. He is a huge help in me living independently in my own home. I still work part-time and get a part pension. Could I sign a percentage of my home over to him so he has some security? What would the costs/process involve?

Glad to hear he is having a great impact for you.

Given the legal nature of this question I have asked Ann Janssen from Estate First Lawyers to provide a response:

You are free to transfer assets during your lifetime to the person/s of your choice. 

 When transferring property, be aware of the transfer costs that are involved. 

Stamp duty on the transfer, along with registration fees are payable on property transfers (usually paid by the purchaser). 

A number of these costs depend on the value of the property, and what the property is used for (for instance, is it a principal place of residence or investment property). In addition, there are legal fees for sellers and buyers and potentially capital gains tax (where the property is not your principal place of residence). Costs also vary from state to state.

If you are gifting a percentage of your property to your grandson, then realise that once you gift it away you cannot legally claim it back. 

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 If you need cash in the future (for example for a nursing home bond), then you may be financially short as you head into retirement and old age. 

Also, if your grandson has a relationship breakdown or bankruptcy, the percentage that you gave to him may well be lost to the ex-partner or trustee in bankruptcy. 

You should get financial advice before divesting yourself of assets.

Finally, there is the option of gifting the property, or a portion of it, to your grandson in your will. 

You can gift in your will as you wish and to whom you wish. However, note that certain people (such as partners, children and some other categories) have the right to make a claim against your estate if you do not adequately provide for them. 

The eligible applicants differ depending on which state you live in and where your assets are.  You should seek estate planning advice from an experienced estate lawyer when preparing your will.

Question 3

I am over 60 years old and about to start a TTR  (Transition to retirement) as at present l am still working. My question is can l withdraw and use this money without paying tax on this amount?

As you are over 60 all payments from super or a pension are tax free, regardless of whether you receive them as income payments or as a lump sum.

A transition to retirement (TTR) pension is great for those who are looking to cut back on their working hours and/or want to top up their income from super, without having to retire.

However, there is no requirement that you must cut back from work.

Anyone who has attained age 60 can commence one of these pensions with their super.

With a TTR pension you can only take out a maximum of 10 per cent of the account balance each year. Note that this restriction is removed once you fully retire or turn age 65, whichever is sooner, as it then reverts to a normal pension.

Craig Sankey is a licensed financial adviser and is the Advice Governance and Technical Specialist at Industry Fund Services.

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.
Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.

This column also appears in our sister publication The New Daily, which is owned by Industry Super Holdings.

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