SUPERANNUATION

Ask Paul: My wife stayed home with our kids, now her super is behind

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Dear Paul,

My wife and I have a large discrepancy in our super balances, as she took time off when the kids were little and I earn a higher income.

Should we equalise the amounts before retirement? Is there a real benefit in that? Is there a super tax that will erode the benefit? I am not retiring for at least 12 years. - Robert

Ask Paul Clitheroe My wife stayed home with our kids, now her superannuation balance is behind

With your question, Robert, we are heading into an area where angels fear to tread, let alone a non super specialist like me.

This is particularly so with just a few lines of information.

But I can give you some general information starting with 'two limits are better than one'. Here I am referring to the transfer balance cap limiting the total amount of super that can be transferred from the accumulation phase to the tax-free retirement phase.

There are quite a few strategies that can be used here, but they are very much linked to your situation, your current super balances, your income and future plans.

It could also involve additional non-concessional contributions, depending on your financial situation.

To get this right, you need specialist advice. You could chat to your super fund, your tax or investment expert. Sorry to 'duck out' of giving you the answer you would like, but there is a lot of complexity behind what seems to be a pretty simple question.

I was looking at this issue as my balance is higher than my wife's for the same reason as yours.

I did some research, then gave up and went to the super expert in our tax adviser's practice.

Thank heavens I did. Super is no longer a generalist area; it is a specific field of advice.

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Paul Clitheroe AM is Money's founder and editorial adviser. 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 Ecstra, an independent charitable foundation building financial wellbeing of Australians. He is chairman of InvestSMART Financial Services, and was chair of the Australian Government Financial Literacy Board and Financial Literacy Australia from 2004 to 2019. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. View our disclaimer.
Comments
Paul Lloyd
February 5, 2025 4.48pm

Thanks Paul for your expert comments .

How do we get the Government to start Super at birth. This will help improve retirement savings and especially for stay at home mums

Peter morgan
February 10, 2025 5.18pm

I really hate to disagree with the advice of seek professional financial advice, and I don't think that is a bad idea. BUT I did that before I retired and acted in the then best financial advice available. LOL. My wife's Super got washed out in the Global Financial Crash so I topped her Super up from my Super savings. Only problem since having been retired for 15 years it seemed that every year the Super rules changed. Due to the Sup cap my wife could not then add to 'her' Super account and my Defined Pension stopped me adding to my Super account and I had three rental properties to sell. I sold two but then could not put any of that money into Super. If I didn't top up my wife's Super account then money from the sale of the rental properties could have been placed into her Super account. My experience has been that good Financial Advice is only as good as the next Federal Budget as the rules change just about every year, making long term financial decision for retirees an almost impossible task. And I am now about to be smashed with Aged Care costs .... Costs that I would not have if I had less money. The real joke is that I am now deemed have tooo much money in Super yet I can't withdraw a penny from that Super Account as this is 'deemed money' not real money. And when I die, poof, the money disappears. Whilst seeking advice on a Super one really needs financial advice on 'whole of life' aka Estate Planning as Super money will eventually go to an Aged Care facility which would have been provided for no cost to you if you didn't have savings! Trump said, 'Dig baby Dig'. I say, 'Spend baby Spend' or the a government will take it from you! So much for advice saving money in Super!