Adding more into your super where possible can leave you better off in retirement.
I intend to retire in about three years, at age 66. We have an investment property in Townsville that is worth about $540,000 with a mortgage of around $250,000 still to pay. I want to retain this property long term. It is currently neutrally geared. I was thinking to pay the mortgage down before I retire, and then the rental income could be a revenue stream. This would need significant payments of $8000 to $9000 a month to achieve, but is not out of the question.
With only three years to retirement, check that your superannuation investment settings aren’t too aggressive. These extra savings that are ultimately intended to clear the mortgage will be invested for a relatively short period, with insufficient time to recover from any sharp market drop. Once your superannuation savings are in the income stream phase, there is a minimum drawing requirement which must be satisfied each year. It is calculated as a percentage of the balance, with the percentage required to be withdrawn increasing with age. At age 60 you must draw at least 4% of your balance. With a balance of $500,000 this would result in a monthly income of $1,666.Almost certainly, yes.
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