err...umm:
No tax in super after you turn 60
the end?
I was thinking more about how to optimize your accounts/taxes for a retirement in your 30's or 40's.
...
Interesting thread. Surprised there's little or no mention of the F word yet...
Franking.
For most mustachian type early retirees investing mostly in shares, I don't see any need for complex tax vehicles. Just crunching a few numbers... Typical retirement cost numbers are $35k (basic) / $55k (comfortable). Let's assume a mustachian couple can cope with $40k p.a (and own PPOR outright). Some other assumptions...
asset allocation : Aus shares 37.5%, global 37.5%, FI/cash 25%
yields : Aus shares 4.5%, global 2.5%, FI/cash 3%
Aus share franking : 85%
By my calculation, a stash of $1025k, invested per above will give a gross income of $34.6k and imp credit $6.3k. Taxable income $40.9k. Assuming this is a couple holding the assets 50/50, the tax free threshold is 36.4k. You only pay 19% on the increment above and you pocket back the imputation credit. tax refund = $5.4k. After tax income = $34.6 + $5.4k = $40k... voila.
I hope I got the franking calc correct, I've been away from Oz for a while and never had to worry about it. But the point is, unless you have much higher stash / retirement income needs, you might not need to do much at all to minimise tax. This basic structure of holding assets in own name split equally between partners, results in a decent tax credit.
As we debated a lot in the Australian Investing thread re: asset allocation/home bias, i did a quick sensitivity on this:
asset allocation : Aus shares 50%, global 25%, FI/cash 25%
stash needed for $40k after tax = $920k
I see others planning for much lower stash with higher Aus % (plus high yield strategies). Just be aware the trade off is much lower diversification.
The above ignores capital growth and assumes you live off dividends/interest only. Hopefully capital growth matches inflation. Super, when it eventually becomes available, can be the icing on the cake.
I appreciate this is a tax thread and not to hijack it on investment. The key point I'm trying to make is tax is much more an issue while accumulating. It can be a tailwind though in the RE phase.