Removal of current restrictions on making superannuation contributions for retirement.
Homesafe Solutions MD and Founder Mr Peter Szabo welcomes the announcement in this month’s Federal Budget of the removal of the current restrictions on people aged 65 to 74 from making superannuation contributions for their retirement from July 1 2017.
Commenting further on the announcement, Peter Szabo said people under the age of 75 will no longer have to satisfy a work test and will be able to receive contributions from their spouse.
“Currently, there are minimum work requirements for Australians aged 65 to 74 who want to make voluntary superannuation contributions. Restrictions also apply to the bring-forward of non-concessional contributions. In addition, spouses aged over 70 cannot receive contributions.
“The federal government will remove these restrictions and instead apply the same contribution acceptance rules for all individuals aged up to 75 from 1 July 2017”.
Some commentators are suggesting that the source of the funds for the voluntary contributions could be from selling the family home by downsizing. However downsizing has significant financial and emotional costs.
The financial costs of downsizing are many however the emotional costs can be far greater. For older Australians the emotional cost of moving to a smaller home in a completely new neighbourhood needs to be carefully assessed and may outweigh any financial benefit.
“The Budget announcement allowing people aged 65 to 74 to increase their retirement contributions should be seen as a welcome initiative as it will allow retirees to lift their superannuation balances and defer / delay the need to downsize.
“For those that still have a shortfall, they can utilise a combination of increased superannuation contributions and an equity release arrangement with Homesafe for the balance thus avoiding the need to downsize and in doing so, avoid stress and retain the family home”, concluded Peter Szabo.