Most advisers would agree that couples in a marital relationship who carefully co-ordinate their investment portfolios along with their other personal finances can potentially put themselves in an excellent position to reach their shared long-term goals.
This joint approach to investing can include ensuring that the asset allocation of all of their investment portfolios – inside and outside super – are appropriate and non-conflicting. It also involves making sure that each partner is making the most of the caps on super contributions if suitable for their circumstances and within their means.
Another issue to consider is whether to make spouse super contributions where appropriate with one spouse contributing to the superannuation account of the other spouse. For instance, a higher-earning spouse might decide to split eligible concessional (before tax) contributions with a lower-earning or non-working spouse. (See discussion below regarding the federal Budget.) There are numerous ways that spouses can save and invest together.
However, for married and de facto couples, particularly those whose relationships last, taking a joint approach to personal finances and investments in general can be highly positive.
Perhaps think about consulting a financial planner as a couple to discuss your overall personal finances and your shared long-term goals.
The recent federal Budget with such proposals as a $500,000 lifetime cap on non-concessional (after-tax) contributions and a $1.6 million cap on the amount that can be transferred into a super pension account underline the benefits of a co-ordinated savings effort. These two Budget proposals once again emphasise that both partners should each work towards reaching their individual contribution caps – rather than most of the savings being in the super account of one partner.
Further, the Budget proposes to allow fund members aged 65 to 74 to make super contributions from July 2017 without meeting the works test. In turn, this would enable spouse contributions for non-working spouses aged up to 74, providing another incentive to take a joint approach to retirement savings.
Self-managed super funds can provide the best example of couples saving together in a co-ordinated way to achieve their shared goals.
Two-member SMSFs hold 69.7 per cent of the $590 billion-plus in SMSFs while single-member funds hold 22.6 per cent of the money as at 2013-14, according to the ATO’s latest SMSF stats. These percentages hardly move from year to year.
Couples in married or de facto relationships would make up vast majority of these two-person SMSFs. And presumably a fair proportion of the single-member SMSFs in existence once had memberships made up of couples in a marital relationship until death or divorce intervened.
The remaining 7.7 per cent of SMSFs have various membership combinations including parents and up to two of their adult children.
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Robin Bowerman is Head of Market Strategy and Communication, Vanguard Australia. As a renowned market commentator and editor Robin has spent more than two decades writing about all things investment. |
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