Ask Noel

I will be 59 in November. I work part-time for myself as a sole trader, earning between $30,000 and $50,000 a year. My wife works full-time, earning $150,000 a year, including commission, and salary sacrifices $50,000 a year. I have $85,000 in super and my wife has $195,000. We have just sold our house and plan to rent for the next couple of years before buying a small retirement home. What would be a good, tax-effective way to invest $700,000 from the sale of our house, bearing in mind provisional tax requirements?

Because of your age, the lack of access is not a problem for you, so I believe the best strategy is to transfer the bulk of the money into super by way of a non-concessional contribution. Your non-concessional cap is $450,000 over three years so be sure not to exceed it. There will be no contributions tax on this as it is an after-tax contribution. You can then take advice about the best way to run your super money in the future it may be worthwhile to start to draw a pension, in which case the fund will become a tax-free fund.

I lost my job after contracting cancer last year and, after surviving treatment, I've been forced to sell my home because I can't afford the mortgage and other payments. I hope to clear about $100,000 from the sale. What is the best thing to do with this money considering I only have a 50 per cent chance of living another five years? I am 63. I would like to travel to the US to see my daughter and granddaughter, buy a car and tour Australia and put myself in a position where I can find more work, but I would still like to keep my sickness benefits going until then.

The last thing you want now is more stress so I suggest the simplest solution would be to leave the money in an online high-interest account with one of the major banks. You could then draw on it as needed.

I have been wondering whether, on retirement, a person with less than $100,000 in super would be better to put the funds into an interest-earning bank account. As you know, an allocated retirement pension pays an annual income based on dividing the total super by the number of years you're supposed to have left to live when you retire. I don't think the super that is held in such a retirement account generates any interest, whereas a person could get at least 4 per cent if the $100,000 was placed in a bank account, even if the balance is diminishing. Would the super do better in an account such as term investment with a bank or building society?

The main purpose of super is to provide for retirement and save tax, and I agree that there is little point in a person with total financial assets of $100,000 having it in super. Your other comments depend on whether equity-based investments such as shares will beat cash-based investments over the long term. You should talk to your adviser to find out what type of assets best fit your goals and risk profile.

I will be 61 in June and, due to sickness, I want to stop working. My wife is 53 and working. I have $500,000 in super and a $250,000 home loan. Is it better to pay off the home loan now by lump sum payment and live on the remaining super and my wife's income, or leave the super in the managed fund until I reach 65, drawing the minimum towards our monthly home-loan repayment? During this period I will have to pay off the home loan, with interest, every month for another four years and after reaching 65 I would then clear the home loan. Is it safe to reasonably predict that by leaving super in the managed fund it will grow by at least 7.5 per cent for another four years? I'm want a

low-risk solution.

I'm not prepared to predict that your super will give you a guaranteed 7.5 per cent after fees for the next four years. My preference is to go for certainty and pay off the home loan now.

Advice is general readers should seek their own professional advice.

Contact noel.whittaker@whittaker macnaught.com.au. Follow him on Twitter: @noelwhittaker. Questions to: Ask Noel, Money, GPO Box 2571, Qld, 4000, or see moneymanager.com.au /ask-an-expert.

I'm a 58-year-old single female working full-time. I earn $80,000 a year and have $240,000 in super, salary sacrificing 10 per cent extra each fortnight. My house payment is $450 a fortnight but I'm paying extra $640 a fortnight. At this higher rate I will have it paid off in seven years. I will work until 65 but would like to cut back to part-time at age 62. A suggestion made to me was to pay only minimum house payments and use the extra money (about $200 a fortnight) to salary sacrifice even more into my super instead. I could then pay my house off when I retire (from my super fund) or when an inheritance comes to me, whichever comes first. What is your suggestion?

Maximising your salary-sacrificed contributions to super is a good strategy because such contributions lose just 15 per cent entry tax, whereas money taken in hand would cost you 31.5 per cent. At your age, lack of access is not an issue.