We want to retire, but our rent is $65k a year. What should we do?

I’m 66, earning $150,000 with $930,000 in super and considering retirement this year. My wife, who is 62, works full-time for about $95,000 and has $430,000 in super. We have an investment property worth $750,000 with a mortgage of $120,000 on it. I also have a blue-chip share portfolio worth $250,000 into which I recycle all dividends. We rent the Sydney home we live in for $1250 a week.

When I retire I’m worried that my superannuation pension would only just cover our rent. This might force me to sell some assets to “break even”, cash-flow wise. Can you suggest a strategy that doesn’t involve downsizing or moving out of the city?

Given your current super balances, income from super will be about $68,000 a year. Your rent is $65,000 a year. So your concern mostly definitely is a valid one.

Australia’s system favours home ownership. One extreme solution would therefore be to liquidate all your assets (may need to wait for your wife’s super to become accessible) and buy a home in Sydney.

Based on the rent you are paying, it would seem you are living in a house worth about $2 million. Your combined assets get you about there. You would then claim the age pension once 67 (work until you reach that age), on the basis that a home is disregarded for means-testing purposes.

The age pension is not a generous income, but it’s an improvement on your current outlook. You could then use the government’s Home Equity Access Scheme to access some equity in your home for extra retirement income.

Alternatively, you could sell the investment property and use the proceeds to boost super, which would raise your retirement income. Be sure to think through the CGT implications. Perhaps you could do the same with the share portfolio, or simply cease reinvesting the dividends. I suspect, however, that this approach only helps at the margins if you continue to pay rent at current levels.

I don’t mean to be disrespectful, but could it be that you are simply living beyond your means? $65,000 a year in rent is a killer in your circumstances.

For 2025-26, my plan is to make a $100,000 tax-deductible concessional contribution to my super to combat an otherwise hefty tax bill arising from the sale of an investment property. I tick all the boxes to make this type of contribution, relying upon the carry-forward rule.

My great concern is that I make monthly withdrawals from my super of $4000 a month ($48,000 pa) and that the ATO will offset this against my $100,000 contribution so that my tax deduction will be reduced to $52,000. Should I be worried?

No, you should not be worried. The $4000 a month is presumably coming from a pension account, whereas the contribution you are making will go into an accumulation account.

These are distinct, so there’s no intermingling, tax-wise. Even if you are operating an SMSF, in which case it may feel like a single fund, your accountant will none-the-less have it split between accumulation and pension for tax purposes.

I’d suggest you double-check on your eligibility to make catch-up contributions, as this is something you don’t want to get wrong. Based on the limited facts you’ve provided here, I’m a little surprised this would be available to you.

Drawing at a rate of $4000 a month would typically imply a total super balance of greater than $500,000.

Paul Benson is a Certified Financial Planner at Guidance Financial Services. He hosts the Financial Autonomy podcast. Questions to: paul@financialautonomy.com.au

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their personal circumstances before making any financial decisions.

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