Your superannuation and your home

ABC radio national Life Matters recently discussed issues about your superanuation and your home in the context of the Australia Talks National Survey.

pay off your house and invest in superannuation

Pervading wisdom from financial planners

You could stop right here and take the pervading wisdom from financial planners "pay off your house and invest in super". However as the ABC radio national Life Matters program (How comfortable will you be in retirement?) revealed these options are simply not available to many.

One caller mentioned investing in a business he shared with his partner. When that relationship combusted he ended up with only 50k to his name.

Noel Whitaker (Noel Whittaker, AM, finance writer and columnist, author of 'Retirement Made Simple') made the point that if he had placed money in his superanuation, he would not have lost that even if a business went broke.

Australia Talks Survey Results June 2021 - How confident are you that you will have enough money to retire comfortably?

The Australia Talks National Survey found 60% of Australians are worried about their retirement and think retirement is a problem for them personally.

However the notion of needing $1m in retirement had been some what debunked by research from Australian Superannuation Funds Association (ASFA) accordig to Kate McCallum, financial advisor, Director of Multiforte Financial Services and the author of 'The Joy of Money'.

In producing guidelines for comfortable lifestyle a retired couple at 65 who own their own home needs 63k pa (640k super) for a comfortable lifestyle including-:

• annual OS holiday
• upgrades/renovations to home
• eat out once a week

Life looks different in retirement, some work related expences disappear and there are some opportunities to earn income in a hobby capacity.

One point Kate McCallum made was make your own financial standard or getting your own personal numbers sorted out for what you need.

Your "human capital" capital is your capacity to earn a living over a lifetime. For younger people this "human capital" could be a concept to remove some of the fear or stress in feeling financial goals are not attainable.

Noel Whitaker suggested for those in the 50+ its a no brainer to concentrate on deductable contribution to super, as opposed to paying off your house.

Understanding Assets test and Income test rules will help you plan for retirement in relation to receiving a pension.

Tax-deductable super contributions

Tax-deductable super contributions, known as concessional contributions, include employer payments, salary sacrifice and personal one-off payments and have a cap of $25,000. There's also a 100k annual cap for your non-concessional contributions - which don't deliver tax deductions but can prop up your super.

If you earn less than $52,967 a year and make an after-tax (non-concessional) contribution of up to $1000, you can receive a government co-contribution of up to $500. (a guaranteed return of 50%)

Will you have enough super?

How much you have in retirement depends on Time and Rate (superannnuation) - compound interest.

Check your superanuation and retirement calculation (moneysmart.gov.au/)

Regions with high balances

Australian Superannuation Funds Association (ASFA) examined average nest egg sizes across all age brackets. It found a majority of states have bigger average super balances outside their capital cities. Among the states and territories, the ACT had the biggest average super balance of $205,369.

It is estimated that currently only 25% of Australians achieve a self-funded retirement.