Ask the Expert: Downsizing in retirement? This is what you need to know
Question 1
Hello Craig, I am awaiting the settlement of my house sale and should have about $1.2 million after costs.
As this was my long-held principal residence, am I able to make a downsizer contribution to super, as well as a non-concessional contribution?
My current accumulation balance is $1.5 million. Which sum should I contribute first?
I have read that the non-concessional contribution should be made first (to bump the total up to $2 million), followed by the downsizer of $300,000, as the latter can be added regardless of the total super balance.
Is this correct? I am 71 years old and fully retired.
Thank you very much.
Patti
Hi Patti,
You might like
Yes you can make both an after-tax non-concessional contribution and a downsizer contribution to super.
For non-concessional contributions, you need to be under the age of 75 (including 28 days after the end of the month in which you turned 75).
If your total super balance was less than $1.76 million as at June 30, 2025, you can use the bring-forward rule and contribute up to $360,000.
For downsizer contributions, there is no maximum age or maximum superannuation balance requirements. There is a minimum age requirement of 55, plus some requirements – including how long you have held your home (10-plus years) and the timing of your contribution (within 90 days of change of ownership). You can contribute up to $300,000 under this rule and it can be used for only one home.
In terms of timing, if you make both contributions this financial year, it won’t matter which is done first as the only eligibility balance is based on the previous June 30 balance.
If the contributions straddle multiple financial years, then yes, the non-concessional should be done first. However, bear in mind the 90-day rule for the downsizer payment.
Question 2
I have $120,000 in super, double that in mortgage, am 59 and growing increasingly ill.
What is the best advice you can offer?
I’m unsure of how ill you are, but obviously working for as long as you can will put you in the strongest financial position.
Ideally, you can grow your super and keep paying down your mortgage so that your super is well above your loan before you retire.
Once you attain age 67, then you would also then be eligible for the Age Pension.
Stay informed, daily
If your health prevents you from continuing to work, then you should investigate applying for the Disability Support Pension. This would give you the same rate of payment as the Age Pension, but you can access it at any age.
Details about the Disability Support Pension can be found at Disability Support Pension – Services Australia.
Question 3
I have $450,000 in super and I am a 73-year-old male with over $800,000 taxable income per year.
What do I do with my super, apart from doing nothing and adding to my estate.
What does anyone do with money?
That is a large income you have, and therefore a nice problem to have.
You have complete control of what to do with your super.
If you don’t believe you will ever need the funds, rather than just leave it to your estate, is it worth giving some money away now? This could be to charities, children, grandchildren or other close relatives or friends.
Giving away or donating money now rather than after you die has a couple of advantages.
First, the recipient will get to use the money earlier and it normally comes in much handier when you are younger with, say, a mortgage and bringing up kids of your own, rather than when you are retired yourself.
Second, you get to see the benefits of your gift while you are still alive – this brings many people pleasure or fulfilment.
Craig Sankey is a licensed financial adviser and head of Technical Services and Advice Enablement at Industry Fund Services.
Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.
Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.
