What needs to be part of your retirement planning beyond super
We spend a lot of time talking about it here at Qantas Super, but your super isn’t the only thing you need to think about when it comes to your retirement planning.
While it will play a big role, your super is just one piece of your financial pie.
Here are a couple of other things you might want to think about as you go about planning for retirement:
Your insurance
Depending on the division of Qantas Super you’re in and your job type, the basic insurance cover you receive through your super account may stop between the ages of 55 and 65 – you can check this by reading the information booklets for your Division. If you have Voluntary Cover through Qantas Super, this will also stop when you turn 65.
With this in mind, it’s important to think now about your insurance needs in the lead up to your retirement, and in retirement.
The insurance needs calculator, provided by the Association of Superannuation Funds of Australia, can give you a general picture of whether you have enough insurance cover to death, disablement, and income. If you have a partner, dependants, a mortgage, or other needs, these are important considerations.
On the flip side, if you have paid off your mortgage and no longer have kids at home, for example, you may find that your insurance needs have lowered.
It’s important to ensure you have the right level of insurance cover for your needs.
Your home
Super is the biggest asset most Australians will own in their lifetime, outside of one other thing: their home. Accordingly, your home needs to factor into your retirement planning in a variety of ways.
First and foremost, it’s important to simply think about where and how you want to live when you retire. Is the house you bought and finally paid off your forever home, or are you planning to sell up and make a sea (or tree) change? Will you be renting in retirement? Will you have a need for aged care?
The answer to the question of where you want to live will likely have an impact on your financial situation.
If you will be renting in retirement, or think you may eventually look into aged care, for example, you need to factor this into your retirement budget.
Meanwhile, if you own a home and know you will be looking to access the Age Pension in retirement, you may want to think about how your home will affect your eligibility. For example, your home isn’t included in the assets test if you live in it, but selling it may change things.
If you decide to sell, the proceeds are exempt for up to 12 months if you plan to use them to buy, build, or renovate another home. However, the proceeds are ‘deemed’ in the income test; this means they’ll be assessed as income from financial assets.
If selling your home, you can also explore a downsizer contribution to your super.
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If you sell after age 65 and fit the eligibility criteria, you can choose to make a downsizer contribution into your super of up to $300,000 from the proceeds of the sale. If you have a partner, you can each contribute up to $300,000 to your super, however the combined contribution amount can’t be greater than the total proceeds of the sale of your home.
This type of contribution will not count towards either your concessional or non-concessional contributions caps, and can still be made even if you have a total super balance greater than $1.6 million. However, it will count towards your transfer balance cap, which is currently set at $1.6 million.
Estate planning
Just like it’s not too early to start thinking about super when you’re kicking off your career in your early 20s, it’s never too early to start thinking about estate planning as you get closer to retirement.
Put simply, estate planning means planning for what happens to your various assets after you die. Though a will may specify who gets what, the goal of estate planning for many people is to ensure their assets are passed on to the right people in the most beneficial and tax-efficient way.
For example, this may involve considering whether a loved one’s eligibility for certain government benefits will be affected, or whether their tax situation will change significantly, based on their inheritance of an asset or even when they receive it.
Estate planning also considers who will be put in charge of your affairs and make decisions for you in the event that you lose your ability to make decisions.
Given the complexities involved, expert advice is key for estate planning. We can put you in touch with financial advisers familiar with Qantas Super to help.
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