1 In 5 Australians: What Super is left by the age of 70?

1 in 5 Australians at age 70

G’Day

Have you noticed the new Westpac advertisements/

That by the age of 70, only 1 in 5 Australians will have any superannuation left?

http://www.theaustralian.com.au/media/westpac-campaign-targets-women/story-e6frg996-1226163181944

The Westpac campaign is particularly targeted towards Women.

Women can now expect to live to be 84 years old.

If you are working up until the age of 65, earning, say, $45,000 gross per annum, that is a take home pay of about $38,000 / $730 per week.

Women generally have fragmented working lives, so let us assume that you retire with a superannuation nest egg of $114,000, equivalent to 3 years full time take home pay.

Actually, it is a wealthy woman who retires with such a bountiful balance in her superannuation fund. The average woman retires with less than $50,000 in super.

The Westpac ads are wonderful. No, not all those anaemic Westpac Managers, but the ever so slightly confronting content of the ads.

It is now 22 years since the compulsory Employer Contribution Superannuation came into being.

Are we really any better off? People have actually saved less since compulsory super because most people ‘assume’ that because they ‘have super’ that it is somehow a source of never ending money.

We all need reminding that once we turn the tables and live off the superannuation, it will very quickly run out.

Substitute 'superannuation' with 'investment' and the same could be said of just about everybody.

Kristine
 
We all need reminding that once we turn the tables and live off the superannuation, it will very quickly run out.

Substitute 'superannuation' with 'investment' and the same could be said of just about everybody.

Kristine

I guess that we'd need then to define our understanding of 'investment' for getting financial independence.
 
Hi,

Even in countries like Singapore where there is a mixture of employee-employee contribution of between 20% to 35% depending on the age of the employee, the Central Provident Fund (Singapore's version of Super since the 1960s) is not sufficent to provide the average worker with a comfortable retirement post 65 yrs.

We are talking about the average worker having paid off their home and retiring with about $125K as of 2011. Often, those with children still depend on them for additional 'allowances'. Many live budget lifestyles in their post-work years.

Regards,

Daniel Lee
 
I live quite happily in a regional city that would suit me just fine in retirement( improved PPOR of coarse).

This with a well paid salary job has me looking down the barrell of about $1,500 per week in retirement from super in todays dollars(average market conditions between now and age 60).

This would be great and its about the in hand figure i would be happy with from my investments in another 20 years( todays dollars)

So basically if property investing turns to crap i will get to my goal on super alone.
If property pays off then im doing really well.
I basically will not be depending on super at all. If its there in 25 years well thats a bonus.

that said i would hate to know that age 60 i only had enough super to match the pension. that would be frightening.
 
As a woman who has only worked sporodically since having the children, I am looking at a grand sum of around $1500 in super. Huge, don't you think?

Hubby has only around $75k in his super too, so that won't go far once we retire either. A product of quite a few years of self employment and no contributions at all.

Guess why investing is so important to me?
 
I guess that we'd need then to define our understanding of 'investment' for getting financial independence.



Yes - very simply: If I retire at 65 and can expect to live until 84, that's 19 years where my income cannot fall below the $689 PER FORTNIGHT age pension.

At least I am guaranteed of this, far better than most countires in the world but not exactly living much above the 'living with dignity' threshold.

Whether I 'own my own' home, or rent and receive rent subsidy, there is still a cost to my accommodation which comes out of the $344.50 weekly income.


So if I want some salt on my chips - or even be able to afford chips at all - I have to have investments of some kind.

My poison of choice is property, but property requires the capacity to borrow. For most people, superannuation is accessible ie does not require qualifying for except to be in paid employment.

So tra-la-la, here I go getting my last pay cheque and off I skip into the retirement sunset.

What now?

Very few people are 'self funded' retirees. Most people qualify for a part or full pension, plus all the perks eg Health Care Card, pharmaceutical benefits, phone, rates, insurance concessions, winter energy benefits etc.

But you don't get concessions for food or for clothing or petrol or replacing any capital items which are going to wear out over the next 19 years

My generation suffers dreadfully from guilt.

Our parents had no guilt as there was nothing to spare. But we feel that we must send our children - if not to private school, at least to Bali on their holidays, pay for their tertiary education, let them live at home without paying board for as long as they like, and eventually pay for their $30,000 weddings.

This leaves my generation with fresh mortgages on their homes and very little more than employer contributions in their superannuation

I can see that the next twenty years will produce poverty amongst aged people on a scale never seen before in Australia. Consumer spending (all those weddings!) later in life, being generous to adult children (full board at no cost), and on top of all that, feeling guilty about it, will and has undermined a whole generation and no good will come of this.

We can all say 'Well, I'm alright, Jack!' and that's great. Mike and I hope to be able to live independently financially and practically for the rest of our naturals, but we have got here by taking on a gob smacking amount of debt and by being determined to achieve our goal.

Most people do not have that opportunity and would not do it even if they could.

So what is the answer?

Westpac are to be commended for taking the initiative with this campaign. If even a couple of thousand women go and talk to Westpac or even start paying an extra $10 per pay period in voluntary superannuation, every little bit helps.

For those of us on Somersoft, in our privileged position as property investors, we may see this as small beer, beneath our contempt. If it doesn't have at least 5 noughts in it we don't even think about it.

But if the government, or Westpac, or whoever, can get another $10,000 (four noughts) into everyone's superannuation in the next five years then Australia as a nation will be better off because of it


Hmmm. Didn't know I felt so passionately about it! Don't have much super myself, bought property instead, but if my Parents hadn't worked for Bradmill Industries which had an industry leading Bradmill Pension Scheme they would have retired with no savings. As it was, a small new car and a trip to visit relatives took care of most of the cash. They really only managed because they had paid off the house and Mum continued to work as a gardener until her late seventies (read: continued working).

So what super / investment / equity do you think you will have left by age 70?

Cheers
Kristine
 
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As a woman who has only worked sporodically since having the children, I am looking at a grand sum of around $1500 in super. Huge, don't you think?

Hubby has only around $75k in his super too, so that won't go far once we retire either. A product of quite a few years of self employment and no contributions at all.

Guess why investing is so important to me?

even when you work as pay then you will only have enough super on retirement for a few years living before you end up on the pension.
 
another issue re super is the fact that the rules keep changing.
that can create a lack of confidence in the product/structure.
also the taxes for low income people can act as a disincentive.
plus the rules re how much can be put in in later life, keep changing etc.

govt seems to keep meddling with super and there is no sign this will change, lack of certainty in such an important matter.

also some people never work for whatever reason and their fate is also an issue. they may inherit or be welfare dependent.

it will be a growing problem as people age, not sure what the answers will be.

no matter how carefully people plan life can still be unpredictable.

we are pleased not to have all wealth dependent on super.
 
As I've said here before, I am not at all convinced super is a good thing, at least not for me. Fortunately it's not an issue, as I bang up against the $25k yearly contribution limit just from my minimum compulsory contributions anyway. I figure between my wife and I (who is my age) we will have between 1 and 2 million dollars in there when we can access it (which is anyones guess). I'll have a think about what to do with it in a few years when I'm ready to take it on as a SMSF.
 
I only ever had 6 weeks off work when my son was born and retired with the grand sum of $84k after 20 years with the same Govt employer.

I put this grand sum into a holiday house at Phillip Island. Luckily it grew in 3 years to $200k. I then sold it and moved the money to Cairns and bought a block of 4 units at $250k. In 4 years that grew to $585k. At that point I knew it was time to sell.

From the age of 19 my husband and I were investing in property here in Melbourne, paying it off by both working. Both of us on minimum wages

I am now in my 60s and have no problem living off the rents from the properties in Melbourne and the cash invested from the properties I sold.

My husband and I knew from age 23 onward that we would not qualify for the old age pension so planned to buy property to live off the rents. It took many years but it has worked. We both knew not to count on super, that is relying on someone else planning for your retirement. Alan was self employed and mainly worked on the maintenance of the rentals. So had no super other than the rental properties.

I strongly advise young people these days to plan for their own retirement and not rely on their employer or super fund.

Chris
 
another issue re super is the fact that the rules keep changing.
that can create a lack of confidence in the product/structure.
also the taxes for low income people can act as a disincentive.
plus the rules re how much can be put in in later life, keep changing etc.

govt seems to keep meddling with super and there is no sign this will change, lack of certainty in such an important matter.

also some people never work for whatever reason and their fate is also an issue. they may inherit or be welfare dependent.

it will be a growing problem as people age, not sure what the answers will be.

no matter how carefully people plan life can still be unpredictable
.

we are pleased not to have all wealth dependent on super.


My problem is that I worry about more than just my super ! Superannuation is not the only thing that can be unpredictable in life...

At the moment actually, my super is worth almost as much as my PPOR (I'm 40, been working earnign average money since I was 17), so it's my 2nd biggest assett... my IPS are so negatively geared that I just hope & pray amount ot something leter on, but nothing is certain !

I wonder if it's a differnt superannuation speciofic issue or jsut the same already well known lack of uynderstanding & responibility for our own finances issue
 
my IPS are so negatively geared that I just hope & pray amount ot something leter on, but nothing is certain !

I can understand that your IP's are -ve at the moment. Assuming that you have those IP for a while now, the important question is whether or not your IP's total returns are +ve (materially +ve of course) or -ve. If the answer is -ve then you may consider getting rid of them. Otherwise, you should be doing fine.
 
Considering I currently have less then $800 in my super, I am not expecting mine to last me very long at all after retirement. Mine keeps on getting eaten up when I go on maternity leave, not that I get much with my employment anyway.

But that is why we are investing now, so that we have other sources of income to support us in retirement.
 
Most people's super will be eaten up by the management fees/rorts that plague everyone's savings. I used to work at a bank - and they are all laughing at how profitable the whole system is for them. They do nothing, they get a management fee. They lose your money, they still get a management fee. No wonder why the average joe-blow at 65 will have diddly-squat.
 
Considering I currently have less then $800 in my super, I am not expecting mine to last me very long at all after retirement. Mine keeps on getting eaten up when I go on maternity leave, not that I get much with my employment anyway.

But that is why we are investing now, so that we have other sources of income to support us in retirement.

Hi Rugrat,

Base on your tax bracket, are you aware that the government can deposit up to $1000 into your Super on a yearly bases if you do co-contributions to it?

http://www.moneysmart.gov.au/tools-...rs-and-tools/super-co-contribution-calculator
 
some find they are no longer eligible for co contribution if they have investment properties, the rental losses are added back to their income assessed for the super co contribution, after submitting their tax return.

it was not always the case but has been that way for a couple of years?
 
Hey pully

I don't think so. Your employer pays 9% on the gross amount of your wages or salary

This is so for any employer provided that you earn the threshold amount each month from that employer

eg if you earn $3,500 per month from Employer A and $350 per month from Employer B then only Employer A pays the contribution. Employer B does not pay superannuation for you but only because you earned below the monthly threshold from that particular employment.

The adjustments made to your income from rent / negative gearing are end of year adjustments and have nothing to do you with your PAYG income
 
yes kristine you are correct. i was referring to the govt co contribution paid to eligible low income people, sliding scale.

nothing to do with the 9% paid by employers.

previously the govt co contribution assessment did not add back rental losses to accessible income when determining how much to pay .

perhaps someone can clarify or find a link to the govt policy?
 
But we feel that we must send our children - if not to private school, at least to Bali on their holidays, pay for their tertiary education, let them live at home without paying board for as long as they like, and eventually pay for their $30,000 weddings.

All of those sound like very poor decisions by the people involved.

I am not sure what demographic you were raised in or what neighbourhoods but my experiences involved public schools, a 'if you want it you pay for it' attitude as well as a 'get out of the house and experience the world' sort of motto.

In life we all get to generally make decisions for ourselves and make our own bed to lie in, the government provides a thin mattress but we are responsible for our own matteress if we want any level of comfort.

I certainly wont be paying for my childrens weddings or trips to Bali etc. I might contribute (depending on my financial situation) but I am certainly not going to by forking out for private schooling, paying their hecs debt or forking out for things that they should take responsibility for.

As for rent, as soon as they are old enough to get pocket money they will be paying rent to help teach them the actual cost of life and how the world works.

Maybe if the generation you mention didnt pay for all the things you say they did we wouldnt have a lot of spoiled 'I want it now' generation Y's out there :)

You do make a good point though in relation to womens superannuation, they do get the rough end of the stick due to their (generally) shorter working lives due to time off for children etc. but as someone else said the rules for super change so much and the payout day is so far away that most people feel that it is an unreliable long term investment.

I recall about 6 years ago I read that Paul Clitheroe (not sure what people on here think about him) said that due to the changes in superannuation over the next 20 or 30 years generally you are much better off investing the money yourself and having control over it. That has always stuck in my mind and as someone who can control their finances I would rather have the cash in my hand and use it as i see fit rather than letting someone else play with it for the next 30 years :)
 
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