ASK NOEL

My wife and I, 55 and 59, have $280,000 in a self-managed super fund. We are buying a farm that will provide us with an income into our retirement. Our accountant says we cannot use the fund money to purchase the farm but can draw a transition-to-retirement pension to cover payment of interest on a loan of a similar amount. It seems crazy to fritter away our super fund paying interest.

My wife and I, 55 and 59, have $280,000 in a self-managed super fund. We are buying a farm that will provide us with an income into our retirement. Our accountant says we cannot use the fund money to purchase the farm but can draw a transition-to-retirement pension to cover payment of interest on a loan of a similar amount. It seems crazy to fritter away our super fund paying interest.

Unfortunately, rules are rules, so you'll have to hope that the earning rate in your SMSF is at least as much as you are paying on the loan.

I am 58 and earn $1290 a week before tax by working three days on an open-ended contract. It has been suggested I start a transition-to-retirement (TTR) pension from my super of $270,000 and salary-sacrifice part of my earnings into super. I feel there is no value in starting a TTR unless one is a high-income earner in permanent employment. If my employment came to an end, how would the TTR arrangement be affected if I could no longer make contributions? If I wished to apply for Centrelink benefits, would I be able to cease the pension so as to maximise Centrelink or is this pension irreversible once started?

Your adviser should be able to calculate what savings, if any, you would make by starting a TTR. You can cease the TTR when you choose and commute the balance back to the accumulation phase at any time.

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature. Readers should seek their own professional advice before making decisions. Email: noelwhit@gmail.com.

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