Many a retired Aussie once dreamt of the day they could finally hang their hat and relax. After years of long hours and arduous working weeks, they finally landed the opportunity to enjoy their freedom. And there would be no looking back.
Or would there?
It seems that older Australians are living much longer than their predecessors, which means more time on their hands. Ultimately, this sees a greater desire for extra money and revived activities. A 65-year old can expect, on average, 20 more years of life. That’s a fair wicket. It’s no wonder retirees are getting a little restless.
With the years stretching out before them, golden agers may have a hankering to boost a dwindling nest egg, beat the boredom, or rekindle a career.
The solution? Return to the workforce. A growing number of seniors are seeking employment years after they stopped “for good”. They’re figuratively stepping back in time to better their future.
But when a retiree starts earning money again, it’s not exactly a joy ride in some pimped-up DeLorean. The reality is, there can be low-lying tax, pension, and superannuation issues afoot.
Beware the tax threshold. A single person of pension age can earn up to $33,000 per year – tax-free. Start earning any more than that, and they may end up in a bit of a tax pickle.
The pension income test allows seniors to earn $174 per fortnight and still be eligible for the full pension. Once they become ineligible, however, they would then need to reapply.
Many retirees do the smart thing by switching their super to a tax-free account. The problem is – they can no longer deposit new funds. They would need to open an accumulation account to accept ongoing contributions – or start paying tax again. They have till age 74 to make personal contributions. After that, they can only receive money from their employers.
It’s certainly a balancing act. One must first stop and ask if there’s value in working? Is it worth their time and financial effort to jump through all the hoops?
Of course, there’s a less taxing way (both financially and timewise) to boost your super. And it can be done way ahead of time to ensure your nest egg will generously see you through an extra 20 years. It’s called property syndication.
Give us a call to find out more about this unique investment model and get back to planning your dream future.