Ask Paul: Help, my war injuries could force me out of work

Q. I am 50 and due to my health not being in great shape I have probably eight to nine years left in work.

My wife is 48 and works part-time on $26,000 a year and is worried about our situation.

We own our home, which is worth $500,000, and have $220,000 in term deposits and $270,000 in my super, into which $730 of salary sacrifice and employer contributions go each fortnight.

We have an Australian shares managed fund worth $185,000 with Colonial First State.

I earn $70,000 in my current job, and have an army pension of $25,500 and a tax-free Veterans Affairs pension of $11,700 a year with a gold card.

Hopefully, TPD will be an option when my war-caused injuries are too hard to deal with.

Please provide guidance as l have worked hard all my life and l don't want to make mistakes in the next five to eight years. - Darryl

A. Darryl, my view is that you should play it safe.

Your health is not great but you have a very solid asset base in your house, $220,000 in safe term deposits and some $450,000 in shares with Colonial and your super fund.

Then you have your army pension and a Veterans Affairs pension.

It looks as if you are maxing out your pre-tax contributions to super, which can be up to $25,000pa.

Extra salary sacrifice super contributions by your wife will not be that valuable as she is a low-income earner. Super, however, is a good place to keep your savings and you could consider adding some as after-tax contributions (ie, your own money).

Equally, I have no problem with you building up your managed fund with regular contributions, or adding to the term deposits. This is a risk-based decision.

In the short term, shares are riskier but likely to provide higher long-term returns.

With a fully owned house, your pensions, term deposits and a good amount in super and shares, you are really in a sound position. I'd just keep building your investments on a regular basis.

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