Here’s the results to our quiz
We know that the overall level of engagement with super savings is quite low across the population. If you are in your 30s – say 20 – 30 years before Preservation Age – this lack of interest is not exactly ideal, but perhaps it’s understandable. You may think there’s little you can do about your eventual nest egg right now while you’re busy juggling work, study and family commitments.
But if you have reached or passed the age where you can access your super, it’s important to ensure you at least know a basic minimum about the rules you could be using to maximise your savings.
That was the intention of our five-question super quiz in mid-August:
- to find out how many members have a working knowledge of their super options
- to learn more about the rules you may struggle with, and
- to briefly explain the rules along with the answers so you could learn as you responded
A big shout-out to the more than 3000 Retirement Essentials members who took the five or so minutes to answer these questions. We now have a much clearer idea of the best information to share to keep you totally up to date with your super savings options.
Here’s the five questions and how the majority of respondents fared.
Question 1 – WRONG
At what age are pre-retirees able to activate a Transition to Retirement (TTR) strategy using their super?
The answer was NOT at 55, 60, 65 or Age Pension age, but at Preservation Age, which can vary from individual to individual depending upon your date of birth. It may have been 55 or 60 for you, but this does not apply across the board.
61% of respondents got this answer wrong, only 39% answered correctly.
Question 2 – RIGHT
Superannuation earnings are tax free once you reach age 60. True or False?
The answer is False. You need to move your money from accumulation to decumulation (usually into an Account-Based Pension) to enjoy tax-free earnings.
63% of respondents answered correctly, with 37% getting the answer wrong.
Question 3 – WRONG
Do you need to declare income earned from super when applying for an Age Pension?
Yes or No?
This question had the biggest error rating, with 68% answering incorrectly. Only 32% knew the right answer, which was ‘No’.
Super savings are viewed as assets by Centrelink (with the exception of certain Defined Benefit Funds). This means you list your savings in super as assets and Centrelink automatically ‘deems’ how much you earn from this account.
This is a worrying error as it tells us some respondents who have checked their eligibility or applied for the Age Pension may have done so based on ‘double reporting’ of their super as both an asset and as income. If this could have happened in your case, use our free Age Pension Eligibility Calculator to check your entitlements again, noting that super is an asset and you do not need to list the associated income stream as income as well. this could very well make the difference between receiving an Age Pension or a knockback!
Question 4 – WRONG
If you use the ‘Downsizer contribution’ to contribute to your super, what is the maximum amount a couple can contribute?
Again, this question causes confusion, particularly when it comes to caps for couples or singles. The correct answer was $300,000 x 2 = $600,000.
Only 35% of respondents replied correctly. And 31% listed the singles’ amount of $300,000, suggesting couples combined amounts are not well understood. With 65% of responses incorrect, we will explain this rule and how it differs from the Bring Forward Rules – which is up to $330,000 each or $660,000 per couple if you meet the eligibility requirements – more fully in a future enewsletter.
Question 5 Right
You can’t contribute to super once you have retired and stopped working. True or False?
This question was answered correctly by 75% of respondents, with only 25% not knowing this rule. The answer is False. You can contribute to super up to age 75 and can use the Downsizer Contributions and Bring Forward provision to really boost your nest egg.
So the quiz ended on a high with that score of 75% correct for Question 5.
But overall, across the 3,000+ responses, most members only got two of five questions correct.
These basic, top level rules are of great relevance to most older Australians at some stage in their retirement journey.
We’re here to help, so please do ask us your most pressing super questions in the comment box below.
Here’s a link to an overview of the role super plays in your retirement funding.
And if you feel you could benefit from a 90-minute ‘Understanding more about super’ tailored consultation with a qualified adviser, here’s how you can get started today.
How about you?
How well did you go in the quiz?
Were you surprised by your score?
Are there any other questions that you find particularly confusing?