Handling home loan debt as retirement looms
Moving to a transition-to-retirement (TTR) pension may be an effective way to pay off a home loan before entering retirement, money expert Noel Whittaker advises.
Responding to Sydney Morning Herald readers’ questions on managing home loan debt in later years, Mr Whittaker explains that this type of pension provides a tax-free way for over-60s to use some of their pension pot to pay off outstanding mortgages or debts on items such as credit cards or personal loans.
At the other end of the spectrum, he also urges the owner of a self-managed super worth $2 million to consider sacrificing up to $100,000 of his salary into super to help him take advantage of a lower tax band.
The reader’s super makes around $100,000 from term deposits, property and shares.
“If your day-to-day situation becomes tight, a TTR would be useful,” he explains.
The rising cost in living has led some commentators to call on the government to raise the retirement age to 67, giving Australians a little while longer to pay off their home loans and other debts.