Ask Paul: My husband is 60 and only has $35,000 in super

Hi Paul,

My husband is 60 and only has $35,000 in super as he has worked for himself most of his life.

He is currently salary sacrificing $100 a week into his super. I am 53 and have just $145,000 in super.

Our mortgage is $290,000 and our home is worth $1.1 million. Our life is our own as our children have bought their own homes.

We want to open up a transition to retirement (TTR) account for him to help build up his super with tax savings while he is still working full time, where he can withdraw wages a little less than what he puts in. What are our first steps?

We want to avoid expensive financial advice planning if we can, due to the low balance of his super.

I work full-time for an employer but I am also the sole director of the family business so happy to facilitate any set-up required on behalf of his 'employer.' - Michelle

Yours is an interesting question, Michelle, but one where I need to tread cautiously. I agree completely about avoiding costs.

One of my favourite and most used money comments over the past 40 years is that fees and costs on investments are certain but investment returns are uncertain. This particularly applies to fees charged by super funds and fund managers, but also fees we pay for advice.

My wife and I have a tax adviser and also an investment adviser.

We happily pay them fees to add value to our wealth creation and management.

This does not mean paying them for investment selection or management - I can do that. But tax is a specialist area, as is super, and we get returns well above the fees we pay by getting our tax structures right.

Your question contains a lot of complexity. Issues running through my mind are things such as ensuring you both use your tax-free threshold.

This year you can both earn a minimum of $18,200 and pay no tax. But if you top up your super via salary sacrifice, you could be paying 15% tax.

So, while I understand your idea of a TTR strategy, I'd need to know a lot more about your situation, your goals and objectives and attitude to risk before leaping in with suggestions that may, in fact, leave you worse off.

Obviously, I fully support you looking at building your super as a wealth-creation vehicle and also a source of retirement income. We are also on the same page when it comes to keeping fees to a minimum. But I think paying a sensible fee to get your strategy right will be money well spent.

You probably have an accountant for your business. I would be shocked if they could not assist you with structuring your finances for a pretty modest hourly fee.

Equally, your super fund is likely to have a member advice service that could give you 'limited scope' advice, just on the issues specific to you.

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