top of page

How you can have TOO MUCH money in your personal name in retirement

Updated: May 6

A lady who wants to work on her retirement planning

Ok, I know this sounds like a good problem to have, but it’s not from a tax perspective.

Each member of a couple can have a maximum of $1.9m in a tax-free pension account when you convert your superannuation. Therefore, it makes sense to try and maximise the amount in your pension account, and then if you still have extra assets, you can store assets in your own name or in your superannuation. You can have an additional $1.1m in your superannuation account to fit under the $3m total super cap, however the returns that these investments make in superannuation are taxed at 15%. 

A Financial Planner can work out the best splits for where to store your assets. Commonly, direct Australian shares are also utilised for franking credits.

Occasionally we see clients who may have a distrust of superannuation, have neglected it due to being self employed or do not understand it, and instead they have all their assets in their own name (often investment properties).

If you have $1.9m in a pension account generating a 6% income yield, you net $114,000 p.a. tax free.

By contrast, if you have $1.9m invested personally generating a 6% income yield, you only net $84,203 p.a. as you are paying $29,797 p.a. in income tax.

You could be paying this extra $30k in tax for maybe another 30 years of your life – which is close to $1 million extra in tax due to not structuring things correctly! If you are in a couple, the difference could be close to $2 million dollars just by not structuring things correctly! If you you are worried about paying too much tax in retirement, book your obligation free appointment time!

The purpose of this content is to provide general information only and is not personal financial advice. We strongly recommend that you consult a financial adviser prior to making any financial or investment decision.

20 views0 comments


bottom of page