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


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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).

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

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).

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.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Click here to ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. Please view our disclaimer here.
Jeff Bailey
October 18, 2019 1.59pm

Hi Paul. I am 65 married and have been fully retired for five years. We own our own home and have approx $1.3 million in super and $900,000 in bank term deposits. Our term deposits are coming up for reinvestment, I am considering reinvesting for a three year period at 1.4%, fearing lower or zero interest rates. I will keep $150,000 liquid as a backup for ready cash. Do you think I am being too cautious locking in the term deposits away for 3 years. Cheers Jeff

Money magazine
October 21, 2019 9.07am

Hi Jeff,

Thank you for your comment. Unfortunately Paul cannot reply to comments. We will pass your question on to him for consideration in the Ask Paul section of Money magazine.

- Money team

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