The Transition to Retirement

Retirement can feel like a single scary number, but the real work is more practical: knowing what you own, how it earns (or doesn’t), and how you will turn it into income you can actually live on. We walk through the “review phase” of a Transition to Retirement plan and why superannuation is only part of the picture. Alongside your super balance, we look at investment assets like shares, cash, term deposits and property, then stress-test them for liquidity, costs, and whether they make sense once pay slips stop.

We also zoom out to the structures that quietly shape your financial life in Australia. If you have a trust, a company, or an SMSF, we talk about when those structures are still useful and when they are just extra complexity you may want to wind down before retirement. From there, the conversation turns to estate planning: wills, powers of attorney, and super beneficiary nominations. We explain the difference between binding and non-binding nominations, and why super and trusts can sit outside your estate unless the paperwork is set up properly.

Listener questions take us into the rules people trip over most: when you can access super (including the preservation age around 60 and the “magic” of 65), how a TTR pension works with its 10% annual draw limit, and why the ATO doesn’t want TTR used like an ATM. We also tackle the uncomfortable but important topic of adult children inheriting super, the taxable component, and how a recontribution strategy can reduce potential tax over time. If you want clearer retirement planning, fewer surprises, and smarter super decisions, hit play, then subscribe, share with a mate, and leave us a review. What part of retirement planning are you reviewing first?

DISCLAIMER: This podcast contains general financial information only. That means the information does not take into account your objectives, financial situation, or needs. Because of that, you should consider if the information is appropriate to you and your needs, before acting on it. If you’re confused about what that means or what your needs are, you should always consult a licensed and trusted financial planner. Unfortunately, we cannot guarantee the accuracy of the information in this podcast, including any financial, taxation, and/or legal information. Remember, past performance is not a reliable indicator of future performance. The Rask Group is NOT a qualified tax accountant, financial (tax) adviser, or financial adviser. Access The Rask Group's Financial Services Guide (FSG): https://www.rask.com.au/fsg

Transcript

Welcome And TTR Part Three

SPEAKER_00 0:00

The Talk Investing podcast and blog discusses investment advice from our previous podcasts and radio shows by Remo Greco and Marco Melado. Learn all things around retirement and investing.

SPEAKER_04 0:25

On the money. G'day, Lisa Leong with you, and we have Marco Mulardo, our superannuation specialist in the house. We've been inundated with calls on how to plan for retirement. We're actually up to part three of Transition to Retirement or TTR. You can listen back to parts one and two on the ABC website, the ABC Listen app. You just look for Sunday mornings with Lisa Leong. There's a page there. All of it is there. So in part one, we did look at initial checks that you need to do and how to start. But today we're going to go a little bit further down into this rabbit warren and look at the things that you need to review. Anything we share here is general in nature. It doesn't take into account your personal circumstances, financial situations, or needs. Marco Mullato, good morning.

SPEAKER_01 1:12

Hello, Lisa. Glad to be back. There's a lot in this.

SPEAKER_04 1:14

There's so much. I do want to look at the review phase. So we've started, we're starting to plan, but you say let's review some things. So where should we start?

Audit Your Investment Assets

SPEAKER_01 1:25

So I think one of the first things you need to do is just review your assets. And it's very easy to think that retirement is just about your super balance. Pardon me. But we tend to accumulate just other assets as we go along life, don't we? We have cash in the bank, we have investment properties, we have term deposits, we have shares, we have managed funds, we have all these bits that we have.

SPEAKER_04 1:49

We've just car and home as well. Do you mean that as well?

SPEAKER_01 1:53

No, I'm talking about your investment assets.

SPEAKER_04 1:57

Not lifestyle assets.

SPEAKER_01 1:58

Yeah. Good pickup. So lifestyle assets don't really generate anything for you, but they make your life easier, right? And they make your life uh Yeah, they feel good because you have them. We're talking about investment assets. So these are assets that might generate an investment return for you. Trevor Burrus, Jr.

SPEAKER_04 2:14

And why are they relevant here when we're planning for retirement, Marco?

SPEAKER_01 2:17

Trevor Burrus Well, because it's all one big pot, isn't it? So when we retire, it's not just about our super balance, it's about everything else we've uh we've uh we've accumulated along the way. And all of that, that one big nest egg, if you like, can be used, and if it's used in the right way, should deliver you what you need in retirement. The review factor comes around, well, I've got these assets, are they going to serve me a purpose in retirement? Are they the right type of asset? Is my investment property, is the rent going to be enough? How much is it costing me? After expenses, how much rent do I get? Is that really suitable for that, you know, the value of that property? Um, what about liquidity? What if I need an extra fifty or a hundred thousand in a particular year because I want to do a lot of stuff, I want to travel, I want to help the kids, I need a new car, I have to sell that whole investment property. So there's no liquidity in that. And then lots and lots of people these days have shares. And and and they've come about them a variety of ways, but often they have a share portfolio. What do we do with that? Can we contribute that into Super? Is that a good idea? What's the difference? Whether I own them personally or they're inside Super. So a big review of your assets is crucial.

SPEAKER_04 3:32

And so is this a bit like an audit? Are we just writing everything down?

SPEAKER_01 3:35

Aaron Ross Powell Writing everything down. We need to know where it is, whose name it's invested in, how long we've had it for, what is the cost base? That's an important thing because that means so the cost base is what you paid for it, essentially what your cost is. Because if we're going to look at some kind of sale or a contribution into super, we need to understand what the tax implication is of that. So we might say it's great to have everything in Super because it's tax-free when you're retired, but to get all our assets in, it's not that easy. We need to think about the tax implications of the A.

SPEAKER_04 4:06

Is this just a big spreadsheet? Is that how you would imagine or envisage this review?

SPEAKER_01 4:10

Aaron Ross Powell I think it starts as a spreadsheet or sometimes just written down on paper. So clients come to see us and just all this stuff's on paper. So they've got a record of it, but it's, you know, it's not not in a sophisticated sort of tracking kind of way. And then we tend to put it all in our models or our spreadsheets or our admin system. So I think the important thing is you have it, you have the information or you have access to it. When you work with an advisor, they're pretty good at then putting it all in a format that's going to be a bit more useful. Trevor Burrus, Jr.

SPEAKER_04 4:38

What else are we reviewing?

Review Trusts Companies And SMSFs

SPEAKER_01 4:40

Okay, so I think we need to review structures. So we've got a lot of self-employed people in Australia. Often they will run through a company or a trust. They might have a self-managed superfund, so that's another structure. Or even if you don't run a business, you may have just accumulated wealth over time or inherited it and it's in a trust or a company. So we need to be thinking about that before retirement around do they still serve a purpose? And if not, how do I wind this down? How do I start to make it less of a part of my life because I don't really need the extra layer of complication. So if there's no real benefit of having it in retirement, we should start to think about how we wind them down and get any assets that might be in there out into your name or out into a superfund.

SPEAKER_04 5:27

Aaron Powell Anything you want to say at this stage about benefits of trust versus companies or anything like that as we're doing this review?

SPEAKER_01 5:33

Aaron Powell I mean trusts generally just are more flexible. So trusts give you an opportunity to stream income really effectively. They're really uh they've got some really good protection benefits. Companies are a bit more stringent. There's a set tax rate, it's 25 or 30 percent. Getting money out of a company can be a little bit difficult sometimes. But these are often historical structures that have just been set up for other reasons, and those reasons were great at the time. Do they serve their purpose now, is what we're thinking.

SPEAKER_04 6:01

Aaron Ross Powell You're listening to Marco Mulato, superannuation specialist with Lisa Leong on ABC Radio Melbourne. We're talking about the transition to retirement and we're looking at the things that you're going to review. So we're reviewing your assets and then you're reviewing your structures. And there's one other kind of bucket here of review. What's that, Mark?

SPEAKER_01 6:19

Aaron Ross Powell Yeah,

Estate Planning Wills And Super Nominations

SPEAKER_01 6:20

so this is a really big one. Let's call this estate planning. And so this is really thinking about some of the morbid stuff, but it's important. So if I'm incapacitated, who can make decisions for me? If I pass away, do I have a well-structured worded will that clearly articulates my wishes and where I want my assets to go? This is an often neglected part of and this is not just for retirement, but you should have this at any every stage of your life. But particularly as we approach retirement, you generally have just bigger assets and you generally have a bit more of a vision around what you want your assets to do post your death. And so reviewing and making sure you have a will, powers of attorney, and there are several types, and also nominations in your superfund because they act outside of the estate. So super doesn't automatically form part of your will. And then also if we have structures, so if we have trusts or companies, they also do not form part of your estate. There has to be something in that trustee or in that company constitution that will tell your executors where those assets go in the company or where the shares in the company might go. So it there's a lot in it. It's tricky, you need professional advice, but you really should start reviewing that as early as possible to start to make your you know, your vision about where you want your assets to end up and who with become really crystal clear.

SPEAKER_04 7:48

Aaron Ross Powell And for those who hadn't heard before, when we're talking about nominations in your super fund, there was an important addendum to this, which is the type of nom m nomination as well. This is really important.

SPEAKER_01 7:59

Yeah, so we have we can have a nomination in a super fund that's what's called non-binding. So that means it's a bit of an intention. What you're doing is telling your superfund who you'd like the money to go to. They ultimately have the decision to make themselves. They'll take your intention, if you like, into account. Most times they're going to pay it to that you know that particular person. But it's non-binding. There may be other people they feel uh warrant some attention in terms of receiving your balance. And so they will look at that. And then there's the binding option, which, as the name suggests, binds the trustee. So if you have a valid binding nomination, your superfund is bound to pay it to whoever you've nominated. So that's really important.

SPEAKER_04 8:42

We are talking about the transition to retirement with Marco Millardo's superannuation specialist. You're with Lisa Leong, it's ABC Radio Melbourne. Steve,

How Much Money For Retirement

SPEAKER_04 8:50

hello. What's your question, please?

SPEAKER_08 8:52

Thanks. Great show. It's good to listen to a Sunday morning special on my way to see my mother at a retirement village. But uh my question is uh the mythical figure to retire for a comfortable lifestyle is uh they say 700,000 and if you're doing well, it's a million dollars. So that's at the age of sixty-seven. How much do you need to retire comfortably for a couple at the age of sixty?

SPEAKER_04 9:14

So, Marco, Steve asks, do you really need seven hundred thousand dollars to retire?

SPEAKER_08 9:21

Ah, good question. So this No no no no no no. I want to retire at the age of sixty. At the age of sixty, to retire at sixty-seven, I want to retire at sixty. So, what is a comfortable lifestyle for a couple at sixty?

SPEAKER_01 9:35

A lot of factors that go into that, Steve. So uh if we look at the ASPA standards, which we've talked about this uh on the show a couple of times. So you're right, they're saying 700,000 by age sixty-seven should get you a reasonably comfortable lifestyle. If you're a couple, you'll draw about 70 grand a year right through to life plus life expectancy. If we're gonna go seven years earlier, obviously you need a bit more than that. Can I tell you what the exact number is? No, not right now, because we have to model it. But I reckon you probably need to add about a hundred or a hundred and fifty to that.

SPEAKER_08 10:07

Oh, I'll stink it double, but fair enough. I'm happy with that.

SPEAKER_04 10:10

Happy with that? Yep. All right, good on you, Steve. Thank you for your calls. Hello, Jane. How are you? Good, thanks. Thanks for your patience. We've got all of our tech stuff happening. Marco can hear you. So what's your question, Jane?

SPEAKER_02 10:23

Um, one, uh, what age can I take my super out? Um and um the other question I do have is I've got a disability child. Do I have to pay back after I die um to state trustees? Anything?

When You Can Access Super

SPEAKER_01 10:46

Okay, so let's do let's do with the first part of the question. So when can you take your super? So you can generally start to access some of your super when you're 60 if you're still working. If you're 60 or over and you're not working, that's considered retired. You've got access to all of your super uh in any way you like, and it's tax-free. So if we're 60 or over and still working, we have some access. If we're sixty or over and we're not working, we have full access. If you're sixty-five, that's a bit of a trigger, that's a that's a magical number. Then it doesn't matter whether you're working or not, you have total access to your super.

SPEAKER_04 11:29

And you know when you're talking about the s uh the age of sixty and you're still working, if you had two jobs and you retired from one job, what happens?

SPEAKER_01 11:39

Okay, that's uh that's another really important trigger. So the cessation of any job post-age sixty. So in your case, yes, if we have two jobs and we just cease one of them, that's pretty magical because that allows you to access your super as well. Yeah. So just stopping one job post-60 is another what we call condition of release. So there's a few you can meet and they're all really centered around either age or work status.

SPEAKER_04 12:06

Thank you, Jane, for your call. So we're sort of talking a little bit now about that transition to retirement and the preservation age, which is the age of 60 that you were talking about. Also the age of 65. When you release

TTR Pension Rules And Limits

SPEAKER_04 12:20

your super funds, is there any minimum amount that gets released at any time, or can you just access whatever you want?

SPEAKER_01 12:27

So this is really good. So you can just access whatever you like. The one restriction you will have if you are between, say, 60 and 65 and still working, so we're not fully retired, but we're at preservation age, you can access your super via what's called a transition to retirement pension. So you've got some access, but there'll be some limitations. So you'll have to you can't take more than 10% of your balance in any one year, and you cannot draw additional lump sums out of it. So that's a bit of a protective measure. What it's supposed to do is allow you to stage down some of your work hours and work a bit less and top up your income with that that access to super, that transition pension.

SPEAKER_04 13:11

Aaron Ross Powell So the transition to retirement pension would only apply to you between the age of 60 and 65, then correct. And then it just stops at 65.

SPEAKER_01 13:20

Then at 65 it automatically converts to what we call an account-based pension. That's just your normal superannuation pension. And that's the one everybody wants, right? We've got free access, there's no limits on it, you can take lump sums. So that automatically will happen at 65.

SPEAKER_04 13:35

And this transition to retirement with limitations, are there different versions of it that you could go to different companies? Or if I'm with an Australian super or one of the big supers, you just go with this?

SPEAKER_01 13:47

Aaron Powell Yeah, they're all going to be the same because they're all governed by pretty strict law. So every product's going to be identical. What you then fill it with in terms of investments will differ, but the structure of the pension is going to be the same regardless of where you are.

SPEAKER_04 13:59

Alistair is here for On the Money. Hello, Alistair. Hi, how are you? Good. Your question for Marco, please.

SPEAKER_05 14:05

Um basically I'm 61 years old. I've got I bought a house to renovate, and I was told that I could access my accumulation fund uh to basically do the renovation. Um now I went to access access some of the money the other day and they said that I'm not allowed to do that. Um I think you've probably just gone through that, but I missed what the uh previous caller said.

SPEAKER_01 14:28

Yeah, so I'm gonna assume you're still working? Yes, I'm working for it. Yeah. So at 61, you can start what's called a transition to retirement pension. So that is not free and unfettered access to your super. It's it's moving some or all of your balance into this type of pension that will then allow you to draw 10% of the starting balance out each year. So if you had a million dollars just to use big round numbers, and you started a pension, say, on the first of July, so for that financial year you could draw out $100,000, being 10% of the balance. And you could do that each year while you remained working. So that would help you with your renovation costs. Then at 65, uh those rules just disappear and you're in what's called a normal uh superannuation pension where there are no limitations. So I think you need to go back to the super fund and just say you don't you just don't want access, you want to start one of these transition to retirement pensions and then they should guide you through it.

SPEAKER_04 15:29

And is there an alternative to a transition to retirement pension?

SPEAKER_01 15:36

Not really. No. If we want access to our super between 60 and 65, that's the one. So there shouldn't be too much confusion.

SPEAKER_04 15:43

Yeah. So wh why does Alistair need to notify wouldn't they know that if he's trying to access his super at this point? They should.

SPEAKER_01 15:51

It's a bit worrying. I mean you're probably on the phone to someone in the call center and they should be trained and they should know this. So it's I'd go back and just start the process again,

Recontribution Strategy To Cut Death Tax

SPEAKER_01 16:00

Alistair.

SPEAKER_04 16:01

Good luck, Alistair. Uh just quickly, this text here from Anne. Hello, Lisa and Marco. Question about super payouts on death to adult non-dependent children. I have been told that to reduce tax component you can withdraw funds, then recontribute as tax-free contribution. Your thoughts, please.

SPEAKER_01 16:18

Yeah, so that uh that's exactly right. So generally what happens when your adult children inherit your super is there's some tax that's incurred. And that tax is calculated. So this is going to get a bit complicated here, but that tax is calculated on the taxable component balance of your super fund. So you need to look at your statement and you will see that part of your statement says tax-free component and taxable component. And it will it will have an amount in each of those components, and that total amount is your balance. If you pass away and you have adult children that inherit, there will be a 17% tax impost on that taxable component balance. The way to start to minimize that is exactly what your caller has suggested, is to make a withdrawal from your superfund if you're allowed, so if you meet the access conditions, you make a withdrawal from your superfund, but that's gonna come out with a mix of those tax components. But when you put it back in as a big contribution, it all goes in as a tax-free component only. So what it's doing is it's reducing the bit that has the tax incurred and increasing the bit that doesn't have the tax incurred. So you're minimizing the amount of tax that's gonna be incurred by the time your children inherit. If you start it early enough, you can minimize it significantly. Some of these tax bills are in the hundreds of thousands, so it's worth looking at and doing.

SPEAKER_04 17:44

And if you start early enough.

SPEAKER_01 17:47

So it's from the moment you have access. So the moment you have access, if you can take your if you can take some money out and then put it back in, you're immediately moulding and shaping those components to your favour from a tax perspective. And we can now do this right up to age seventy-five, by the way, because the rules have changed. So there's a long time you could do this, what we call re-contribution strategy. You could end up going from a position of potentially your kids paying hundreds of thousands in tax tomorrow if you died, to a point where they may pay no tax at all. So it's a it it it's a very significant way.

SPEAKER_04 18:26

And is there a limit on how much you can do each year?

SPEAKER_01 18:28

That's why it's those those caps we talk about all the time, which is $120 a year or $360. So so we have a lot of clients, for example, that will do $360 every fourth year. We take out $360,000, we put it back. Then in year four we take out $360,000 and we put it back. And we're just washing those components so that the amount of tax their kids are going to have to uh incur at the time of inheritance just gets continually, continually squashed. So it's a really long-term way of you know tax management essentially, death tax management, really, is what people are calling it. So it's exactly right. It's called the recontribution strategy. It it's a bit tricky to employ, so you might need some help if you don't know all the rules around it, but very clever.

SPEAKER_04 19:13

Good question. And

Multiple TTR Accounts And ATO Risks

SPEAKER_04 19:15

okay, here's John with a transition to retirement question. G'day, John.

SPEAKER_07 19:19

G'day.

SPEAKER_04 19:20

G'day.

SPEAKER_07 19:22

And yeah, I've got I've actually got a TTR account which I opened a couple years ago. And I've used I've taken out the 10% maximum that's allowed. But I've got a super account also. And I want to access more. Could I actually close that account, open a new one? Or do I just open a second one? And would I be penalized if I access another 10% from another account this year?

SPEAKER_01 19:50

So that's a very good question. Uh so there isn't anything stopping you from closing your existing TTR pension, starting a new one, and getting a new 10% limit. Alright? Or if you've got super in another fund, just starting a a TTR pension in that fund and you'll have 10% of that limit. So technically there isn't anything stopping you, but the ATO has come out in the past and said we don't want people doing this regularly because it it's almost bordering on illegal access. I mean, if you think about it, you could do this every week of the year and get this new 10% uh threshold. But that's not the intention, is it? So what the ATO is saying is like having numerous credit cards, I guess. It's like it's not in the spirit of the law, which is you know, the the policy was designed to allow you to gradually slow down your work hours and and and stage into retirement. They don't want people using it like an ATM and just accessing, accessing, accessing. And so can you do it once or twice? Probably yes, okay. If it was a regular pattern, I think the ATA would be on to

Grandkids Savings And Testamentary Trusts

SPEAKER_01 21:00

you.

SPEAKER_04 21:00

Thank you, John. Hello, Jan. Good morning.

SPEAKER_06 21:04

Good morning. Yes. Um look, I when my grandchildren were born, I opened up uh an account for them and every month have put money into that account. Now, I want to know if I can put it somewhere that they don't have access to it until they're a certain age. What's the best way to go around that?

SPEAKER_01 21:24

Now, are you putting money into like a bank account or a super fund or a No, into their b in a bank account.

SPEAKER_06 21:31

I just opened up a normal bank account for them.

SPEAKER_01 21:34

Okay. So it really depends how whose name that bank account is. I I I'm gonna suggest it's probably in your name as trustee for them, is that right? Yes. Yeah, so so really y you're the legal owner of that bank account. So they won't have access to it anyway until that money or that bank account is either changed in name or the money is withdrawn and and put into something in their name. So when you're as trustee for a miner, they don't really have any control or access or ownership of that money because you are you are the trustee.

SPEAKER_04 22:08

Forever. Forever.

SPEAKER_01 22:11

If it remains that way, it's forever.

SPEAKER_04 22:12

Yeah.

SPEAKER_01 22:13

But there'll come a point where you want them to use it, and at that point either you will withdraw it and give it to them or then that becomes a money gift. Then it becomes a gift. Just like a cash gift. So it's like you've saved for them, but you've done a really nice thing because you've sort of put it in their name as well, but you are ultimately the trustee. You have control over when and how that's spent. Yes, I was going to say the next part of that is if you pass away, you need to have something in your will that directs those proceeds to those miners. And if they're miners, then you need another bit in the will that says, well, who's going to look after that for them? Who's going to step in as trustee for them? Or if they're significant amounts, we can use these structures called testamentary trusts, which are desi come out of wills. And they hold the assets for whoever the beneficiaries are until a certain point in time, and you can nominate a certain age. You can put conditions on the trust like I'm happy to for the income to be paid every every year, but no capital withdrawals. There are all sorts of things you can do for that. So that really is governed by your will in terms of you passing away and what happens with that next stage.

SPEAKER_06 23:26

So the testamentary trust, who do I see that to?

SPEAKER_01 23:30

So I'm I hope you have a will. If you have a will, then I'd go back to the solicitor who drew it up. If you don't have a will, then you need to see a solicitor, and they'll draw up the will and you just talk to them about your grandchildren and what you want to happen, and then they'll suggest the most uh like appropriate structure to put in your will.

SPEAKER_04 23:48

Beautiful. Thank you so much, Jan, for your call. Excellent questions there. So let's go to Heather now. Heather,

Adult Children Inheritance Tax Explained

SPEAKER_04 23:55

good morning. Good morning. You've got a question for Marco.

SPEAKER_03 23:59

I do. Thank you very much. Um I'm wanting to leave a percentage of my superannuation funds to um non-dependent children. And I believe that if I actually nominate them as a binding nomination in my super funds, even when they get the money, they'll have to pay tax on it as part of their income. So I'm wondering, is it better for me to leave no um nomination in my fund that the the monies would go to my estate and then have a clause in the estate saying um for the super funds to go to each of my children and that therefore they wouldn't have to pay tax, is that correct?

SPEAKER_01 24:35

Yeah, not really correct. So the the tax is going to be incurred either way. So this is a little bit what we were talking about a couple of calls ago. So this is this uh this taxable component in your balance if if your adult children inherit. If they inherit, so there might be a small tax saving, but it won't be significant. So if they inherit directly, so you you you nominate them in your binding nomination, that taxable component will incur 15 percent tax plus Medicare. So that's 17 percent tax. So that's even before that that's remitted to the tax office before your kids even get it, right? So that's a that's a super fund obligation. If instead you direct it to your estate and your will deals with it, well your will your estate doesn't pay two percent Medicare levy because it's not it's not a person, so you save two percent. But eventually, when the kids inherit that part of your your super balance, the estate is gonna have to pay fifteen percent tax anyway.

SPEAKER_03 25:30

Okay.

SPEAKER_01 25:31

Yeah, so it's it's it's just it's a it's a flow-through structure.

SPEAKER_03 25:34

Yeah, they don't have to pay it the one as part of their income tax on each of their whatever their rates are.

SPEAKER_01 25:39

It's never part of their income tax. So it's a it's a it's a separate um uh amount of money that that has its own tax rate, and that's that fifteen percent. The difference is if it if they get it individually, they pay the two percent Medicare levy on on that balance as well. If it goes to the estate, they'll avoid the two per cent. The fifteen percent, which is the you know, the the tax rate that applies, that just that just can't be got around. The only way you can avoid that is if you draw all your money out before you pass away, put it in your bank account. Therefore, when they inherit it's not super monies anymore.

SPEAKER_04 26:14

And this is your recontribution strategy as well, or is that different then?

SPEAKER_01 26:19

Yeah, so recontribution is the part that is before that, that to try and fix the problem. Yeah. Right, to try and get the amount of tax down, but then at the point of death or close to death and funnily like uh funnily enough, a lot of people are doing this, they're they're they're dr drawing all of their super out so that the fifteen percent tax isn't incurred by their adult children. So they take out their money, they put it in the bank, and when they pass away, the kids inherit and it's just normal cash. There's no inheritance tax if if you like inverted commas. That's happening a lot.

SPEAKER_04 26:55

Interesting. Thank you, Heather. Really interesting questions this morning. Um we've got Peter

Using Inheritance And Claiming Deductions

SPEAKER_04 27:00

here from Ballarat who's also called in. Hello, Peter.

SPEAKER_09 27:04

G'day, Lisa, good day, Marco, Peterful stuff we're talking about today. Um I'll just draw out a scenario for you. I'm 50, I'm single. Um, I've got about 175k in super, which I know isn't a lot. Unfortunately, um had two uh deaths in the family last year, but I'm fortunate enough to have two inheritances on the horizon. I just wanted to ask about do I contribute to super? Uh I'd like to buy a property. I know it's a pretty broad question, and I believe I can put in about 30k to top my super up immediately with minimum tax um incurred. What do you think?

SPEAKER_01 27:53

Yeah, so it is a that's a big question. You would need to know a lot more about your circumstances to give you uh really meaningful advice. But I'll just talk generally about the things you should be thinking about. Is super a good place for it? Very likely, yes, because we know that when you eventually retire or when you hit 65, for example, you get to have this big super fund to convert to a pension and it's tax-free for life. So it's a great place to have most of your money, if not all of your money. If we can't get it all into super and you have a little bit outside, that's not the end of the world. As an individual, you have a tax-free threshold and some offset, so you can earn quite a bit as a, let's call it a senior in Australia without having to pay tax. So they're the two things I'd be looking at. What can I get into super and what can I not? And then you need to think about what types of investments are gonna suit you. So what is gonna suit you in retirement if you're not working, income-generating investments, for example, some low-risk stability investments, some shares, uh perhaps some alternative assets, so that you've got a really nice broad mix in a portfolio that's gonna be liquid for you, so you can draw money out of it, and also pay you a regular income stream. They're the sorts of things I'd be thinking about.

SPEAKER_04 29:11

And is this where Peter sits down and asks those questions about who do I want to be in retirement?

SPEAKER_01 29:15

Correct.

SPEAKER_04 29:16

What do I want to be doing? Am I traveling or am I?

SPEAKER_01 29:20

A good advisor will start not with the numbers, but what what what you picture the next 20 years of your life looking like. Yeah. And then we go back and we build we build a plan around that.

SPEAKER_04 29:29

Yeah. Peter, thank you for that amazing call. Let's go to the text line now. So James is here. Are you ready for this one, Marco? Still working full-time, says James. Salary sacrificing a bit, but not enough to hit the 30,000 concessional cap. I've started a TTR pension. If I make a non-concessional contribution to the accumulation fund, can I still claim a tax deduction on that amount I contribute after tax? The non-concessional contribution doesn't take the total contributions past the 30k cap. Thanks, James. Can you dissect that for us? That was a lot.

SPEAKER_01 30:06

Yeah. So I think what we're saying is we're working, we're contributing to super, we're making these uh salary sacrifice amounts which are called concessional contributions.

SPEAKER_04 30:17

Yes, and that's the cap thirty thousand.

SPEAKER_01 30:18

Cap thirty thousand, and that's the bit we get a tax deduction for. Yes, beautiful. We're not hitting thirty thousand. So let's say we're hitting twenty. Yes. Right? Yes. And we've got an extra ten we want to put in. Yep. Can we just put that in from our bank account and claim a tax deduction? Yes, we can.

SPEAKER_04 30:36

Okay.

SPEAKER_01 30:36

Yeah.

SPEAKER_04 30:37

Beautiful.

SPEAKER_01 30:38

Easy. Yep.

SPEAKER_04 30:38

Oh, that was your answer?

Key Takeaways And Sign Off

SPEAKER_01 30:40

That that's the answer. We can.

SPEAKER_04 30:41

All right, beautiful. Well, thank you very much. Thanks, James. Thanks for all of your amazing phone calls as well. Marco Millardo. Pleasure. We're just slowly itching inching through this retire uh transition to retirement. So much there, right?

SPEAKER_01 30:53

Oh, this was a good one this morning. There are some very, very clever listeners out there, Lisa. So glad to help.

SPEAKER_04 31:10

More than police academies, I can say. On ABC Radio. Great to have your company up.