Buying property in your super fund is increasingly popular, and lets face it, most of us are jaded by the current investment options so for most Aussies it makes sense to at least look at buying property – bricks and mortar, we just understand it. I can’t argue with this, but I want to put a counter argument to buying property in super as your only investment.
Now, BIG disclaimer – this is NOT financial advice, i am very obviously not apprised of your full financial circumstances – and you should always take proper personal advice before making ANY decisions!! This is for education and opinion only – ok?
My thoughts on super is that it’s fantastic to have a forced nest egg put aside because most of us just wouldn’t do it if left to our own devices – but – if you’re young and fancy free I believe you should build investments outside of super as well because the bottom line is …
You don’t control when you can access your super.
It’s legislated. And, legislation can change.
Currently (January 2015) the age at which you can access your super is determined by your year of birth and looks something like this:
| Date of birth | Preservation age |
|---|---|
| Before 1 July 1960 | 55 |
| 1 July 1960 – 30 June 1961 | 56 |
| 1 July 1961 – 30 June 1962 | 57 |
| 1 July 1962 – 30 June 1963 | 58 |
| 1 July 1963 – 30 June 1964 | 59 |
| From 1 July 1964 | 60 |
source – https://www.ato.gov.au/Individuals/Super/Accessing-your-super-benefits/When-you-can-access-your-super/
AND there’s plenty of speculation about this being raised to age 70.
(I’ll put an asterix here, the transition to retirement scheme gives some clever access to your super with a trade off being additional contributions, kind of a tax effective way to keep working and boost your super balance – not retire early)
So, currently, if you’re under 50 you can’t retire until age 60 regardless of how hard you’ve worked – if all of your money is in your super fund.
HOWEVER, if you have assets outside your super fund that you can sell and live off of the proceeds – or live off of the rent – then you’re back in control.
Super is a brilliant tax vehicle, thats it. Fantastic for your forced savings, even tipping in a bit extra – but I’m not sure I would advocate relying solely on assets inside super. I think I would be heartily peeved if the preservation age prevented me from being able to retire exactly when I want to retire, especially if I am financial to do so – if only the government said I could.
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