Ask Noel

Each week, financial adviser and international best-selling author Noel Whittaker answers your questions.

Each week, financial adviser and international best-selling author Noel Whittaker answers your questions.

I am 36, single, rent at $200 a week near the beach and love the lifestyle. I earn $110,000 a year, have a managed share portfolio worth $26,000, savings of $118,000 and no debts. My super is $65,000. I have been thinking of investing in property to have an appreciating asset that will help me build equity, so in future I can use that equity to buy a home. I'm not sure if that would be a good strategy, or whether it's better to save the deposit to buy a home then pay it off and live off my super. I would like to invest in property soon. What are the pros and cons of investing in property now?

To optimise your affairs for tax purposes you should be trying to minimise your non-deductible debt and maximise your deductible debt. This is why a strategy of buying investment properties with the aim of using the equity to buy your own home would be unsatisfactory because the interest on the loan to buy the house would not be deductible and you would pay tax on your rental income while being stuck with a large non-deductible mortgage on your home. A better option may be to buy the home first and reduce the loan as much as possible - you could then borrow against the equity in the home for investment. The interest on this loan would be tax deductible.

Recently you mentioned that wherever possible, super should be in the wife's name. I am able to claim the aged pension, although my husband will not be eligible until October and I will be working three days a week. Should we put money into my super?

I never said that super should always be held in the wife's name - there is a range of factors that determine the best person to hold the bulk of the super. If one partner is considerably older than the other, you gain access to your super faster if it is held in the name of the older partner. If Centrelink benefits are the main consideration, the super should be held in the name of the younger where it is not counted by Centrelink until that person reaches pensionable age.

I am 72 and my wife earned $89,000 last year. We have a son at university who gets $120 a week Austudy and I get $75 a week British pension. We own our home, which is valued at $550,000. We have built another house, which we want to move into when we sell this one. This house is valued at $750,000 and we owe $400,000 on it. My daughter lives in this house rent free. Can I claim a part pension or get a health care card? I've had cancer.

The cut-off point for the income test for pensioner couples is $70,345 a year, so you will not qualify. The decision is whether it is financially effective to reduce your wife's income to a level where you would qualify for a part pension.

The Commonwealth Seniors Health Care Card is available for couples over 65 who have a combined adjustable taxable income of less than $80,000 a year. You won't qualify for this either.

Good advice the key to a happy retirement

The explainer

I seek your advice on how much I need to retire. I am 58 and earning $64,000 a year. My wife is 49 and earning $22,000 a year. I have $550,000 in super and we have $400,000 in term deposits and managed funds. I am thinking of retiring at 60 and possibly working part-time. We have a no-frills lifestyle. What are your suggestions on our position? I am totally confused by what I read.

If you have a no-frills lifestyle you probably need about $50,000 a year in retirement. Based on the rule of thumb that the amount needed in retirement is your required income multiplied by 12, it would seem $600,000 would be sufficient. That is a very rough figure because the amount of money you will need depends on a number of factors such as how long you live, the state of your health and whether your children come looking for a handout. You also have to take inflation into account. It would seem you are better placed for retirement than the average Australian but it's important that you have a relationship with an adviser and monitor your progress on at least an annual basis — this will enable you to make changes to your portfolio as necessary.

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