In this guide
Downsizer webinar
Learn about downsizer super contributions in detail in our webinar, including how the eligibility rules work, plus timing, Centrelink and strategy considerations.
Lee and Mandy’s example below shows how a downsizer contribution could work in a real-life scenario.
- Lee (76) is retired with a current super balance of $100,000 invested in a simple account-based pension.
- Lee’s wife Mandy (75), also retired, has a current super balance of $80,000 invested in a simple account-based pension.
- They receive the full Age Pension from Centrelink of $47,070 per year (combined).
- They have been drawing sufficient pension payments from their super to bring their total annual income to $75,000 (drawing almost $28,000 from super in the last year).
- Lee and Mandy are now concerned that their super balances are dwindling and can’t support continued withdrawals at the same level.
- They want to know whether their super will run out soon if they continue living on $75,000 a year, leaving them completely reliant on the Age Pension. They also want to know if they have options to make their income more sustainable without compromising their lifestyle.
They have the following assets:
- Primary residence: $1,100,000 (four-bedroom home, bought when they were 40)
- Home contents: $10,000
- Cars: $10,000
- Cash savings: $5,000
- Total superannuation: $180,000.
It’s important to them to continue receiving their current income to support their active social life. They remain fit and well and don’t want to compromise. While they’re no longer travelling internationally, they do want to enjoy local trips.
Using Mercer’s retirement income simulator, they discover that if they continue living on $75,000 a year, their super balances are expected to have run out by the time Lee turns 84.
Initial estimated annual retirement income
Source: Mercer retirement income simulator
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