Too Old to Die Young

Scott,

Subconsciously I always thought I would die young, as my parents and older sister did. So I have tended to ‘live for the moment’. Now that I am still (thankfully) here at 69, I am too old to die young! My husband and I continue to work in our own business, which we enjoy. Our joint taxable income last financial year was $116,000, and we have $750,000 in business loans. If we sell the business and pay off the loans, we should realise about $600,000, but that’s it — no super, no house, no assets. Should we buy something modest, or rent?

Jill

Hi Jill,

You’d be amazed how many people I meet who tell me that retirement ‘just sort of crept up on them’ ...… over 50 years.

But I’ve got a few suggestions that should help you out.

First, talk to your accountant before selling the business, as there are capital gains tax (CGT) exemptions for small business owners who are selling and retiring, especially if they’ve owned the business for 15 years and it has a turnover less than $2 million per year. Depending on your circumstances, it may be more tax efficient to roll the money into super — and then you could take out a lump sum and buy a modest home.

Second, given that you’ve enjoyed your business, why not negotiate with the new owners (once you’ve sold) to continue working in it a day or so a week? It’s good for your transition to retirement, and good for the transition of the business. Best of all, you could earn $20,800 ($13,000 p.a. of work bonus and $7,800 income) before your rate of Age Pension is reduced.

Combined this equates to $35,058 of Age Pension and $20,800 of employment income, for a total of $55,858 p.a. of income. The best part is that it would be tax free — couples can have $28,974 p.a. each of income tax free, thanks to the Seniors and Pensioners Tax Offset (SAPTO).

Scott