An inheritance of $700,000 arriving at age 64 presents both opportunity and complexity. For someone approaching or in early retirement, the first priority should be a clear-eyed assessment of goals: whether to boost retirement income, clear existing debts, help family, or a combination.
Financial adviser Paul Benson, writing for Nine newspapers, emphasises that while a large windfall can feel overwhelming, several straightforward strategies exist. The most tax-effective move for most Australians is to contribute to superannuation, taking advantage of concessional contribution caps and the carry-forward rule for those with a total super balance below $500,000. For someone earning less than $250,000, contributions are taxed at just 15% instead of marginal rates.
Beyond super, paying off the mortgage or other high-interest debts is often a sound step. The family home is typically exempt from capital gains tax and age pension assets tests, making housing a stable foundation. However, advisers caution against overly conservative or risky moves: parking the entire sum in cash may lose value to inflation, while speculative investments could jeopardise retirement security.
A common recommendation is to allocate funds across a diversified portfolio of defensive assets, such as bonds and term deposits, alongside growth assets, such as shares and property. But the precise mix depends on personal circumstances — including existing super balance, health, pension eligibility, and appetite for lifestyle changes like downsizing or travel.
Some argue that spending a portion on quality of life — a home renovation, a trip, or a gift to children — is also valid. The key, experts agree, is to seek independent financial advice tailored to individual goals before making any irrevocable decisions.