Jane was born in February 1968 and plans to retire at the age of 65. She has
Question:
Jane was born in February 1968 and plans to retire at the age of 65. She has $550,000 invested in a defined accumulation fund and $300,000 invested in a term deposit with a 1.5% return. Jane also owns a rental property worth $800,000 with a mortgage of $400,000. She is a full-time employee at a marketing firm and earns a salary package of $150,000 per year. Jane has just found out that her employer has been contributing to a defined benefit superannuation scheme on her behalf since she started working there in 2000.
Calculate how much Jane can expect to have in her defined accumulation fund at her planned retirement age of 65, assuming an annual return of 5% and employer superannuation contributions of 10% of her salary. Consider the 15% concessional tax on superannuation contributions.
Explain the differences between a defined accumulation fund and a defined benefit fund
Jane is considering selling her rental property and using the proceeds to make a non-concessional contribution to her superannuation account.
What factors should she consider before making this decision, and what would be the tax implications?
Personal Finance Turning Money into Wealth
ISBN: 978-0134730363
8th edition
Authors: Arthur J. Keown