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

[MIW]

SMSF - You should totally control it if you can!

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.

I have ran my own Super (SMSF) since 1995 after leaving a well paid job and to start a number of businesses (well rather self-employed businesses).
Since I programmed all those fees in Managed funds working for an insurance company then, I personally disliked them. You are right they will get paid whether it's an upfront fee, a switching fee, a withdrawal fee or an exit fee. On top of that there's a management fee. So there's no point about worring about something we have no control over, so I took Super money into total my control and invested myself since then (Obviously I educated myself by reading 100+ books, on shares, trading, property, commodities, gold, silver, economy etc....)
At that stage I read how ENRON employees lost it all when it went bust so I thought, I rather do it myself and have myself to blame for rather than others. I must admit I was rather successful as I have increased my Super by 43 times. Now that was by contributions, investments, sale of shares, physical gold/silver, direct property etc....
What I am pointing out is not how great I did but that sometimes control and education is the best recipe for creating wealth. I realised that nobody will make me money rather than Me. I know it's risky and not for everyone, but I am amased at how many SMSF do not control their investments but rather give it to others to manage for them. It's nothing wrong with that if you do not have the knowledge but then we cannot blame anyone else.
Financial planners basically have vested interest in their products they sell, it's only normal that's their profession. I couldn't meet one that would suggest I invest into property directly or buy physical gold/silver instead I was offered managed funds, bonds, insurances, etc... products they sell. I may be wrong but the stock market high of 6800 is down to 4250 and I think that means that most people's Supers from 1987 would be worth half the value now (just genarally speaking, I know some made gains but some not). And what if you are just about to retire and your Super is halved?
So be open to information, educate yourself in finances, and take your own control if you can.

 

[Angel]

Exactly! I was reading on a consumer forum a few months ago that there is this misconception out there that tells us that you have to have three hundred thousand dollars in a SMSF in order for the income to balance out all the fees and charges. The writer pointed out that the fees to the Govt are a few hundred dollars a year, that is all. (Sorry I would not be able to find the links)

To me it negates the point of being self-managed if i am going to pay another person to manage my fund. I too will be educating myself on SMSFs when I have completed the project I am currently working on.


How is this for advice from a Financial Planner?
I was advised by someone (dinner table conversation only) to sell the two IPs we bought in 2009 in Brisbane - for a loss, post floods, mind you, - write off the stamp duties we spent, and then repurchase them again in to the SMSF that this planner would set up for us, at a fee of $7,ooo per annum (rolls eyes)

 

[redwing]

How is this for advice from a Financial Planner?
I was advised by someone (dinner table conversation only) to sell the two IPs we bought in 2009 in Brisbane - for a loss, post floods, mind you, - write off the stamp duties we spent, and then repurchase them again in to the SMSF that this planner would set up for us, at a fee of $7,ooo per annum (rolls eyes)

Would be interesting to see how they do that

 

[MTR]

I have ran my own Super (SMSF) since 1995 after leaving a well paid job and to start a number of businesses (well rather self-employed businesses).
Since I programmed all those fees in Managed funds working for an insurance company then, I personally disliked them. You are right they will get paid whether it's an upfront fee, a switching fee, a withdrawal fee or an exit fee. On top of that there's a management fee. So there's no point about worring about something we have no control over, so I took Super money into total my control and invested myself since then (Obviously I educated myself by reading 100+ books, on shares, trading, property, commodities, gold, silver, economy etc....)
At that stage I read how ENRON employees lost it all when it went bust so I thought, I rather do it myself and have myself to blame for rather than others. I must admit I was rather successful as I have increased my Super by 43 times. Now that was by contributions, investments, sale of shares, physical gold/silver, direct property etc....
What I am pointing out is not how great I did but that sometimes control and education is the best recipe for creating wealth. I realised that nobody will make me money rather than Me. I know it's risky and not for everyone, but I am amased at how many SMSF do not control their investments but rather give it to others to manage for them. It's nothing wrong with that if you do not have the knowledge but then we cannot blame anyone else.
Financial planners basically have vested interest in their products they sell, it's only normal that's their profession. I couldn't meet one that would suggest I invest into property directly or buy physical gold/silver instead I was offered managed funds, bonds, insurances, etc... products they sell. I may be wrong but the stock market high of 6800 is down to 4250 and I think that means that most people's Supers from 1987 would be worth half the value now (just genarally speaking, I know some made gains but some not). And what if you are just about to retire and your Super is halved?
So be open to information, educate yourself in finances, and take your own control if you can.

Well done.

I think it is risky not managing your own super, not to mention that these super fund companies are paid commission regardless of performance.

It costs me around $1500 for my accountant to audit my SMSF.

Cheers
MTR

 

[Kristine..]

1 in 5 Australians at age 70

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

Notice the date?

It is two years this month since I started this thread.

No, it was not a thread about superannuation funds, or SMSF, or anything like that

It was a thread about planning for our own financial independence, or for at least a little financial margin above the bare bones of the government pension

So in the past two years, if you read the original post, what changes have you made to your own financial situation to increase your own chances of a stable financial old age?

Since October, 2011 I have made a number of changes in my own circumstances and have also changed my line of thought. Life got a bit complicated for a while there and I got side tracked dealing with those complications

Over the past two years I have simplified and rediscovered that my original ideas really were and remain what and how I want to do things

So where will I 'be' by the age of 70?

Well, it finally looks as if we have found a builder, so the holding fee haemorrhage may have an end date, and we have determined a Part (b) to the same plan and that is also very simple and feels quite manageable.

Nothing has anything to do with 'superannuation funds' as such, but it has much to do with life beginning at 70 and the capacity to imagine a financial quality of life for fifteen years past that point.

If you have also made financial progress or changed tack since October, 2011 I would be pleased to hear about it.

Cheers
Kristine

 

[Peter Parker]

Its really quite simple:
divide your superannuation by 20. This will provide a rough income figure that can be sustainably spent, no more no less. It should roughly cover inflation over time (ie over time it should leave enough funds that the income will grow over time, so long as roughly only 5% is withdrawn each year).

I used to think that was an OK ratio to use, but now think it's on the light side.

It assumes that you will get a return of approx 8% (after fees) and inflation around 3%.

If average returns are 8% then that means that in half the years it may be less, and in some cases for several years running. If you want to preserve the real value of your capital you may want to withdraw (spend) a lower proportion than 5% pa.

Where average real wages are rising you may want to increase your income by that amount to 'keep up'. There is also the risk of inflation exceeding 3%. Tax rules may also change. You may also want to make occasional lump expenditures some years (eg car or holiday)

Some have said that you need 60% in retirement of what you needed when working for the same standard of living. You may spend less on commuting and clothes but when you are working you are by definition not spending for the best part of the day. Whereas in retirement you could be spending. So you may want to spend more than when you're working. Although there is relief when you get over 60 due to the generous non-means tested Seniors Card discounts conferred on some government services.

Add all those up and dividing by 30, 40 or even 50 is much safer. Which means you may need double than originally calculated for a given retirement income.

Even $1m, though far better than many retirees have, is not a particularly huge nest egg for a couple, unless you've assumed a particular life expectancy and are content to run down your capital.