All set for new goals

I AM divorced and own my own home. I want to retire from the public service when I turn 55 in April 2010. I will get an indexed pension of $31,500 a year. By undertaking postgraduate study to become a clinical counsellor, I will become qualified about 60. My salary is $103,000 a year, of which 40 per cent has been salary sacrificed into super. I estimate my average annual expenses to be $42,000 (not including overseas travel or study fees). I also have a $920,000 AGEST super fund plus a block of land in Queensland worth $300,000. Should I wait to sell until I've retired and the market improves or should I sell before I retire and put the money into super? Can I afford to retire? D.H.

Your indexed pension will cover about three quarters of your expense needs, leaving you to top it up with about $10,000 per annum from your other savings, which means that you can afford to retire if you want to.

However, I suggest that you take your planned studies and fulfil your ambition to become a counsellor. Gratifying work is an excellent way to keep your mind busy as the years pass.

Top up your income with a transition to retirement pension from your AGEST benefits, while recontributing what you don't spend into your original AGEST accumulation fund. Plan to sell your block of land some time in the future when prices are high, with the intention of contributing the money into super, preferably using concessional contributions to reduce any capital gains tax liability and, if retired by then, before age 65.

$1000 gift for super

MY DAUGHTER is 18 years old, studying at uni and living at home, depending on me. This financial year she will earn about $1100 as a swimming teacher with $200 work expenses to claim. If I give her $1000 as a lump sum payment to put in her super, can she get the government $1500 super co-payment? Will she get quizzed by the tax office because she earns less than she puts into her super? Can she get Austudy to increase her income? A.C.

Yes, your daughter can take your gift and contribute $1000 into her super as a non-concessional contribution. The fact that she has only earned $1100 is irrelevant but you might help her to find better-paying work next term.

Austudy is only payable to full-time students over 25 who meet income and assets tests. She might be eligible for the Youth Allowance, payable to students aged 16 to 24 who, if not financially independent, are subject to a parental income test. For her to get the full allowance, your income would then need to be less than $36,592 if she is your only child. Above that, the allowance phases out rapidly.

If you have a question for George Cochrane, send it to Personal Investment, PO Box 3001, Tamarama, NSW, 2026. Helplines: bank ombudsman 1300 780 808 pensions 13 28 00.