By PJ Patterson, financial planner
The Australian superannuation system is the one of the best in the world when it comes to saving for retirement.
Even though retirement savings mechanisms have been around Australia since 1900 the super system as we know it today was formed in 1992. The system has been evolving ever since and now Australia has one of the most well-funded retirement systems in the world.
One recent change to super contributions took effect on 1 July 2018 and is known as the ‘Downsizer Contribution’. It is designed for those who have sold their principal place of residence and enables them to put a portion of the sale proceeds directly into their super account.
It’s a great strategy for anyone who wants to top up their super and there are some rules you need to be aware of.
Here are some of the biggies:
- You must be 65 years old or older at the time you make the downsizer contribution and there is no maximum age limit.
- The home must have been owned by you or your spouse for 10 years or more prior to the sale.
- You must make the downsizer contribution within 90 days of receiving the proceed of sale.
- If eligible, you can make a maximum of $300,000 (each) and the contribution amount cannot be greater than the total proceeds of the sale of your home.
If you are thinking of downsizing or have recently done so, please seek professional advice before taking action. This is a great way to pump more money into what I believe in my professional opinion (as an American who moved to Australia around two decades ago) is the world’s best retirement system!
Find more information here.
PJ Patterson is a financial planner and mortgage broker. Check out his company Keystone Financial or listen to his podcast Money Matters.
