Ask Paul: Where should I invest $28,000 for my retirement?


Q. I am a typical 64-year-old female. I spent 10 years out of the workforce as I was raising my children (no child care in those days).

With only $90,000 in super (I am currently contributing an extra $400 per fortnight pre-tax).

I am also minimising tax by salary packaging (I am a nurse in aged care).

I own my home (value about $500,000) and have a small villa worth around $180,000 which is negatively geared (with a $75,000 mortgage).

Ask Paul: Where should I invest $28,000 for my retirement?

I am thinking of selling my villa in the year after I retire to try and avoid too much capital gains tax.

As much as I would love to retire at 66, financially I believe it will be more like 69, when I can also pick up long service leave.

I love to travel and would like to still have a holiday each year after retirement if at all possible.

I have a few shares like Telstra, Coca Cola, Tabcorp and Woolworths, total value only around $3000.

I have $28,000 in the bank. Could you give me some ideas on growth products that would be applicable in my situation? - Glynis

A. I am delighted that you own your own home Glynis, that provides a terrific base.

If after retirement you sell the villa, along with your investments and super you will have investment assets of around $230,000 plus the growth on these and the $400 you are adding to your super a fortnight.

The next most important issue for your lifestyle is your eligibility for a pension.

Today a single home-owning retiree can have up to $250,000 in investments and draw a full pension.

If you work to 69, you will have more than this, but that limit should increase with inflation.

So it seems to me you should be getting a full, or close to it, aged pension. This pension would be around $20,000 a year and would be the key part of your retirement income.

In terms of growth investments, I think that super is your best friend.

I would suggest you look at adding as much as you sensibly can via salary sacrifice.

Holding some cash as a safety buffer is always a good idea, so I'd focus on building super. Make sure you are in a low fee fund and in the investment option that suits you best.


Paul Clitheroe AM is a respected financial adviser and Money's chairman and chief commentator. He is chair of the Australian Government Financial Literacy Board, and author of several personal finance books. Got a money question? Ask Paul.
Post a comment
Link to something 85FXawno