Ask Paul: My husband is 62 and has no superannuation

Q. In December we paid off the mortgage on our apartment in a very nice north-eastern suburb of Melbourne. My husband has his own business and, unfortunately, no super. I have super of between $65,000 and $70,000.

Recently we came into a small inheritance. Not life-changing but not to be sneezed at either - $100,000.

My husband would like to buy the property upstairs. I would too but I know it's an emotional buy. I don't want to be negatively geared with another mortgage at our age and would prefer to put the money into super.

I am 57 and my husband 62 and I would like to have a bit more cash flow to enjoy life a little and save for my retirement by putting the $100,000 into super.

Would it be best to have our own individual super? I was thinking that perhaps because I'm a partner in his business we could salary sacrifice some from the business and some from my part-time TAFE work into my superannuation. (I work part time due to not having the best of health.) - Marion

A. Thanks, Marion, this is a great example of risk and return.

If you buy upstairs and rent it out, given the population growth in Melbourne, it is likely to do well in the long run. With low interest rates, the rent may cover most of your mortgage and other costs.

But the problem is, as you say, having debt at a later stage in your careers. It also puts most of your eggs in one basket.

The final straw for me is that you mention your health is not great and that you would like more cash flow. So if I was in your shoes, I would not buy the property upstairs and take on new debt.

Frankly, I think taking more risk with new debt is likely to give you better returns. But this will be at the cost of more risk and, I suspect, lowering your cash flow. So I am voting for topping up your super.

Here, though, you need specialist advice. Salary sacrifice is a great idea but it depends on what you both earn and a number of other factors.

I'd chat to your accountant or a fee-charging professional adviser, or you may find your current super fund offers member advice at a modest charge.

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