Many Australians choose to remain in the workforce well into their sixties. However, as a 60-something there are additional issues to consider around your super.
investing in your 60s and still working
Your investment strategy
Reviewing your super’s investment strategy can be a key step in your 60s. You may want to opt for a lower risk strategy, with more of a focus on conservative rather than growth investments. Our financial advisers can help you make an informed decision, and you will be advised of any potential costs..
Growing your super
It’s also worth taking advantage of opportunities to boost your super.
One option is to salary sacrifice part of your before-tax wage or salary into super rather than receiving the money as cash in hand.
Or, you can choose to make personal super contributions, which may be claimed on tax.
Tax deductible personal contributions are limited to $25,000 annually (set to rise to $27,500 from 1 July 2021). This total includes employer’s compulsory super contributions. You can’t claim a tax deduction for superannuation contributions paid by your employer directly to your super fund, only for personal super contributions that you make to your super fund. So if your boss contributes $20,000 to your super, your personal contributions, on which you may be able to claim a tax deduction is limited to $5,000 in a financial year.
If you don’t make the full $25,000 contributions in a single year, you can carry forward unused contributions for up to five years as long as you have less than $500,0001 in super.
Using your super to wind down your working week
At this life stage, you may want to ease your way out of the workforce by switching from full-time to part-time work. If that’s the case, your super can help.
A transition to retirement (TTR) pension lets you top up your employment income with regular payments from your super. From age 60 these payments are tax-free. Your employer will still needs to make compulsory super contributions on your behalf if you meet minimum wage/salary thresholds.
Drawing down your super ahead of full-time retirement can have an impact on the final value of your super. We recommend you discuss your individual needs with a financial planner before commencing any TTR strategy.