Question 1. I need help to understand finance overall. I’m very financially illiterate and have no idea where to start.
One of the most important things you can do to take control of your future is to take control of your finances and improving your financial literacy (or ‘being good with money’) plays a big part in that.
Financial literacy helps you achieve your goals, whether that is to buy a house, pay for kids’ education, have a good retirement or being debt-free.
Conversely, being financially illiterate could mean having a far lower standard of living throughout your life, as well as having money troubles that can lead to stress and anxiety.
I have always thought there are already enough stresses in life – by removing money as one of them, it can be a big help.
There are so many great books and online articles that you can refer to. A good place to go is your local library for a whole selection of books that you can borrow for free on this very subject.
Moneysmart has a large selection of articles, tools and tips that I use and would recommend to anyone. It’s run by ASIC and the purpose of its website is to help Australians make the most of their money.
Saver Plus is a financial education and matched savings program that has been around for a while and has helped many people.
Also check out the Financial Capability Database. This provides a comprehensive overview of a wide range of financial capability programs delivered by government, private and not-for-profit organisations.
The Financial Planning Association of Australia (FPA) runs a website, Money & Life, that is dedicated to helping Australians improve their financial wellbeing.
This site can also put you in touch with a licensed financial adviser who could provide personalised advice.
Just taking an interest in your finances is a good start and by continually doing this you will find your financial knowledge will grow steadily over time.
Question 2. My wife and I are about to retire at the end of the year. At that time I will be 68 and she will be 57. I have 450k in super and she has 440k. She will be working one or two days per week until she is 60. How can I maximise my pension because I have reached my retirement age and she hasn’t?
Centrelink will treat you as a ‘couple’ and as such all of your income and assets will be combined when assessing how much you are eligible for under the age pension.
A very popular strategy to maximise your age pension for couples where there is one older partner, is for the older partner to cash out some of their super, and the younger partner then contributes those funds to their super account.
The reason for this being so effective is that super is not counted under the income or asset test until you attain age pension age, or until you convert it to a pension. In your case, your wife’s age pension age will be 67 so funds can be sheltered in her super for another 10 years.
You need to consider that your wife can only contribute up to $330,000 in after-tax non-concessional contributions to stay under her contribution cap.
In any case it may be best to convert a small amount of your super into an account-based pension to supplement your age pension and your wife’s part-time work.
For a couple who own their own home, you will receive the full age pension if your combined assessable assets are less than $419,000, and can still receive a part-age pension if assets are less than $935,000 (as at November 2022).
Depending on how much income your wife receives from her part-time job you may fall under the income test.
Again, funds held in her super are not counted but if in your name they would be deemed under the income test.
A couple can earn $336 per fortnight before their age pension is affected, all the way up to $3431 per fortnight before they lose the age pension altogether.
Once she retires about 60, she could then look to convert some of her super to a pension and leave the majority in a super account to maximise your age pension payments.
Given your situation I would suggest obtaining some personal financial advice.
Question 3. I receive JobSeeker and have just sold my house. I have reached preservation age for super. Can I put the sale of house into super for a few months?
Yes, you can, up to your relevant non-concessional (after tax) cap, which for most people under the age of 75 with less than $1,480,000, is $330,000 (2022-23 threshold).
However, bear in mind that although you have met your preservation age to access the funds you would still need to declare yourself ‘retired’.
And you can’t really do that if you are applying for JobSeeker and telling them you are looking for work.
The other ways to access your funds would be to resign/leave a job after you reach age 60, or when you reach age 65.
Craig Sankey is a licensed financial adviser and head of Technical Services & Advice Enablement 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.
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