I am a single mother, 40, with two children (girls both 12) attending high school. I work full-time (earning $70,000) and am renting a property for $530 per week.

I have a lump sum of $90,000 from a divorce settlement. I have $45,000 invested in my superannuation, with additional death and disability provisions within my superannuation. I live and work in north-western Sydney and I'd prefer to stay in this area. How can I best manage my finances so as to maintain a reasonable lifestyle while still making adequate provision for retirement?

You're doing it tough and you'll probably have to leave your super to grow with just the compulsory employer contributions until your daughters start earning and paying rent. The biggest expense is your rent. Is there any way this can be reduced? Do you have a best friend in a similar situation who would be willing to share a house with you? Also, is it possible to undertake self-education in order to move up to higher-paying positions?

I wouldn't suggest looking to buy a house now as prices are likely to drift down, so invest your $90,000 safely in bank term deposits and don't touch it.


I am 52 and my partner is 57.

I work full-time and earn about $86,000 a year and plan to continue working for a number of years. My partner works part-time and earns $15,000 a year. We own an investment property interstate - valued at about $1.7 million - which we are renting out. If the property were sold, there would be some capital gains tax liability. The annual net income from the investment property is $30,000. We have about $340,000 in superannuation between us. We also have $360,000 in savings in high-interest accounts. Our two children are at university and will remain financially dependent on us for another few years. What should we do to ensure that our finances are arranged to support us into our retirement? Should we consider selling the investment property? Should we establish a self-managed super fund (SMSF)?

Your major investment is your $1.7 million property earning a paltry 1.8 per cent net income. You don't mention the city, so all I can say is that, generally, I doubt residential property prices are going to do much for some years. Australian house prices as a whole remain absurdly high compared to other parts of the world and it is a moot point whether we can maintain such heights in the face of the monstrous economic problems the world is facing at the moment.

One option is to sell the property and put as much as possible into a super fund while retaining enough aside to allow you to buy a home in which to retire at some stage in the future. If you want to set up a SMSF, you first need to judge whether you have the time and the experience to run a portfolio. We frequently see criticism of managed funds being unable to match an index, but most of these are run by experienced professionals backed by teams of analysts, and if they can't achieve that goal then you can rest assured the majority of SMSFs are also unlikely to do it.

If you have a question for George Cochrane, send it to Personal Investment, PO Box 3001, Tamarama, NSW, 2026.

Helplines: Financial Ombudsman, 1300 780 808 pensions, 13 23 00.

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