Your age and your money: how to get the biggest cash boost

Birthdays over age 50 can bring fresh chances for tax and super incentives, government benefits and other financial windfalls.

Numbers season arrives soon in Australia.

End-of-financial year profits will be calculated, pay rises may start, tax deductions will be claimed, tax cuts will come and your superannuation savings will be boosted by bigger employer contributions.

The old saying “age is just a number” rings true for many people trying to fight Father Time, but your age right now is an increasingly important number for a pile of financial strategies.

A presentation I recently watched by Later Life Advice founder Brendan Ryan looked at “the lucky numbers” for older Australians, highlighting the important birthdays where the rules can really impact their personal finances.

“You may now be able to change your super tax rate to zero, apply for an age pension or Commonwealth Seniors Health Card, move funds to super on the sale of your home, or put more money into super from your savings to reduce tax,” Ryan says.

He says the biggest birthdays to watch are:

• Age 55, when you are given the ability to make downsizer contributions to superannuation, an extra $300,000 per person on top of existing contribution caps if you sell a home.

• Age 60 is the preservation age for people to be able to withdraw their super or switch it from the savings phase to the zero-tax pension phase, as long as they meet a condition of release such as leaving a job.

• Age 65, previously the pension age, is still an important birthday because it’s when people can withdraw their super regardless of whether they are still working or not. All super can now be switched to an account based pension where the tax rate is zero.

Seniors have plenty of options to boost their finances after key birthdays. Picture: iStock

• Age 67, the official pension age, gives you access to government benefits even if you’re a homeowner couple with more than a million bucks in the bank. Qualifying for just one dollar of pension can deliver cheaper pharmaceuticals and other concessions, and you can apply for the pension three months before your birthday.

• Age 74 is where you can no longer make voluntary super contributions, or use what advisers call a super re-contribution strategy to potentially eliminate Australia’s tax on super inherited by non-dependants, so planning before this date can be important.

That’s a lot of valuable information, and I’ll add a few numbers to that myself.

AGE 40

This is around the time that many people start to look more closely at their superannuation.

Super experts say we should be thinking about our nest eggs well before this, but the reality of mortgages, marriages, children and careers often gets in the way. If you haven’t yet checked your nest egg and your super fund’s forecasts for your estimated retirement balance, now is the time.

AGE 57

Ten years out from the official retirement age, it’s time to get your skates on.

Revisit what your estimated super balance will be at retirement, and the income in will provide, using free online calculators, and if it doesn’t look good you can still make big changes to fix it, with the help of financial advice.

ANY AGE AFTER 50

As super balances get bigger, couples should watch their balances closely. Super splitting can be used to pump more money into a younger partner’s super, which can improve eligibility for extra tax concessions or more age pension later.

Age is just a number, but knowing the financial figures surrounding your age makes getting older more rewarding.