SO WHEN IS YOUR PRESERVATION AGE?
For most of us it is either 55 or 60.
If you were born before 1 July 1960, your preservation age is 55.
If you were born after 1 July 1964, your preservation age is 60.
Between 1960 and 1964 the age steps up year by year (see the table below)
All the figures on this page are ‘in today’s dollars’ which means they’ve been adjusted for inflation.
And it makes a big difference: save $500 per month for 35 years at 5% p.a. and you’ll end up with $570,913. Hooray! Job done! …except that in 35 years inflation will erode the purchasing power of that money and it won’t buy you the lifestyle it would today.
That’s why these figures - and the calculators we link to - must and do adjust for inflation.
MONEY FOR NOTHING?
Some companies may offer you an income stream — not for part of the existing value of your home — but in return only for its capital appreciation.
This may sound very attractive. (Almost too good to be true?)
These agreements, called property options, are generally valued very conservatively though. The income you receive will probably be much lower than the capital appreciation of your home which you are giving up.
This is one to think about before 30 June. If you need to borrow to contribute $1,000 to invest in your superannuation, in order to receive the $500 Government co-contribution (and you’re confident you can pay the loan off quickly) it may be worth considering.
BUT WAIT, THERE’S MORE…
Up until 30 June 2017, if you earn less than $37,000, the government will also make a 15 cent 'Low Income Super Contribution' for every dollar of concessional super contributions (that is ‘super guarantee’ contributions by your employer and/or ‘salary sacrifice’ contributions by you from pre-tax earnings) — up to another $500 co-contribution.
…subject to the same eligibility rules about work earnings, age, and residency.