As a doctor planning ahead for your retirement, your future comfort, lifestyle and security are probably high on your list of priorities. With this in mind, it’s important to consider your superannuation balance, property investments and ongoing financial planning options so that they all align with your retirement goals.
The Australian Government has created a scheme that allows people over the age of 65 to contribute towards their superannuation funds using the proceeds of downsizing their home.
Here’s what you need to know.
What are downsizer contributions?
Downsizer contributions into superannuation were introduced in the 2017-2018 Federal Budget. It stated that if you are an Australian aged 65 and above, you can contribute up to $300,000 into your superannuation fund from the proceeds of selling your home – given that you meet the eligibility requirements. If you have a spouse, then both of you can make a total contribution of up to $600,000. Of note, the age you can make this contribution will reduce to age 60 on 1 July 2022.
Despite its name, though, a downsizer contribution can also be applied if you’re planning on selling your current property to purchase a larger home too.
The scheme is also not classed as a ‘non-concessional contribution’ and therefore does not count towards any of your normal contribution caps.
A downsizer contribution can still be made even if you have more than $1.6 million inside the superannuation system, though it will count towards your transfer balance cap. The transfer balance cap is a lifetime limit on the amount of superannuation you can move into a retirement income stream it applies once you move your super savings into the retirement phase.
What are the qualifying requirements of the scheme?
To qualify for this scheme, here are some rules to follow:
Dr John Warren and his wife are eligible to make a Downsizer contribution and decided to sell their home for $1.5 million. They can contribute a maximum of $300,000 each under this scheme for a total of $600,000 between them.
Dr Katherine Li and her husband who are both eligible for a Downsizer contribution, sell their property for $500,000. They can contribute a maximum combined amount of $500,000 with no more than $300,000 contribution to be made by either one of them.
What are the benefits of a downsizer contribution?
Through the Downsizer contribution, the Australian Government has effectively allowed you to potentially make a substantial voluntary boost to your superannuation and to fund your retirement from proceeds of what is typically the sale of a significant investment.
This scheme also offers other additional benefits, especially if you are nearing retirement age. Here are some of the advantages it can provide:
Get tailored advice that suits your situation
Growing your superannuation fund balance with the Downsizer contribution can be a smart choice for healthcare professionals like yourself with your sights set on retirement. However, the overall process can be complicated and tedious – especially for a busy Doctor.
Additionally, the above information is provided as a general guide and doesn’t take into account your financial goals, superannuation balance or specific circumstances.
For these two reasons, it’s important to consult the help of a financial advice specialist and consider seeking advice before acting on any of the information contained herein.
Fortunately, you can rely on our experienced team at Doctors Wealth Management to review your situation and recommend a personalised financial solution for your own circumstances.
We can help you achieve a peaceful and rewarding retirement by getting the most benefit out of Government schemes such as the Downsizing Contributions initiative.
You can find additional resources and information about Doctors Wealth Management on this website, booking an appointment or calling 1800 128 268 to speak to us for a no-obligation initial discussion.
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