3 hours ago
3
July 12, 2026 — 5:01am
Can I afford to retire? I turn 65 later this year. I own my home, along with two investment properties, one of which still has $130,000 owing. Rental income is around $40,000, and my defined benefit pension should be net $56,000 per year. I have $400,000 in super. Our household expenses including food etc are about $100,000.
You certainly look in a sound position. I imagine a significant portion of the rental income goes out in loan repayments and property running costs, but I would guess something like half of it would be available for you to spend.
That plus your defined benefit pension gets you to $76,000, which means you need to find $24,000 more. If this is drawn from your super fund, your drawing rate would be 6 per cent, which is quite reasonable. If you need extra funds later in life you can always offload the investment properties.
To be sure, you should get a financial planner to do some detailed modelling for you, but on the basic information you have provided here, it seems to me that retirement is feasible.
How do I plan for retirement if I hope to work forever? I like working. I think I’d get bored if I was retired.
Well done, that’s a fantastic position to be in. Most people don’t have a precise retirement timeline. My approach is to frame your retirement timing as “having the option of”.
The optimal way to avoid death benefits tax is to live a long time and use your super up. That’s what it exists for.
Perhaps you work on having the option of retirement at 65 for instance. Crunch the numbers and understand what needs to happen to make that possible. Now, when you get to 65, if things are going well, both health and work wise, working beyond this point is no problem, it’s just cream. The beneficiaries of your estate will be grateful.
I retired last year and recently discovered that my adult children may have to pay tax on my superannuation when I die. My fund says my balance comprises a tax-free component of $65,393 and a taxable component of $542,477. What tax would my children likely pay, and is there anything I can do now to reduce or eliminate that tax?
At your current balance there would be around $92,000 deducted from your super fund before the remainder is passed onto your adult children, assuming they are non-dependants.
In practice, I very much doubt that anywhere near this amount of tax will be deducted. This is because your balance today won’t be your balance when you pass away. Hopefully, you have many more years ahead of you, and so it should be that by the time these savings are passing on to the next generation, your balance is significantly lower than it is today.
The optimal way to avoid death benefits tax is to live a long time and use your super up. That’s what it exists for.
Alternatively, most people suffer a period of illness before passing away. During this period, you can simply withdraw whatever funds you have left in super, and then there is no super balance upon death on which tax would apply. This is but one reason why it is important to have Enduring Powers of Attorney in place because you might not have capacity to get the withdrawal done.
Depending on your age and contribution history, there may be scope to implement a recontribution strategy, which increases the proportion of your balance that is tax-free. You should explore this further with your financial planner.
Paul Benson is a Certified Financial Planner at Guidance Financial Services. He hosts the Financial Autonomy podcast. Questions to: [email protected]
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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