A Depressing Forecast... and what can be done about it

[D.T.]

Not if employers are advertising a slary package inclusive of super..

Another worry is the employability of a person nearing 70.. what if for some reason they had to apply for a new job in their 60's, what chance do they have?

Then they should have got off their bums and stopped buying holidays and cars and taken some financial responsibility.

 

[ok180]

Another worry is the employability of a person nearing 70.. what if for some reason they had to apply for a new job in their 60's, what chance do they have?

I actually don't think this is going to be a problem. If more older people are working it will just become the normal thing.

It's like going back 30 years ago and telling people that in another 10 years time living expenses are going to sky rocket and by then most households will be duel income. Back then once a women had children she pretty much stayed home with them. Times changed and now the kids are plonked in child care at 6 months and it's normal for wifey to also work. Same thing will happen with the elderly and employers will make space for them just as they do for women with families.

 

[virgo]

Clever!!

Costello made some fundamental stuff-ups with super, with the main one being based on the premise of making it simpler, the allowing of withdraws tax free over 60 will come back and bite the government big time. Take your money out, invest in in your own home either improvements or upgrading, a pension free asset, no CGT implications (to you), can take a reverse mortgage and pull out additional living funds if required and the government pays the bills with a now full pension entitlement.

Hi Greg

I am liking your posts more and more...please keep on posting gems like this

You had a previous post on Living on Equity which was superb too

many thanks!

 

[vbplease]

I actually don't think this is going to be a problem. If more older people are working it will just become the normal thing.

It's like going back 30 years ago and telling people that in another 10 years time living expenses are going to sky rocket and by then most households will be duel income. Back then once a women had children she pretty much stayed home with them. Times changed and now the kids are plonked in child care at 6 months and it's normal for wifey to also work. Same thing will happen with the elderly and employers will make space for them just as they do for women with families.

I tend to disagree..

You made the point people nearing 70 have one foot in the grave, so physically they can't perform laborious type jobs.

There's only a finite number that can form the workforce. Increasing the working age increases the number of employees.

The trend to me seems that younger people are becoming more prejudiced to older people.. the likelyhood of a 30yr old retail manager employing a 65yr old is almost zilch.

I think it can be common for ones desire, or work ethic to drop off over 60. I can think of two classic examples at my work - they make it quite clear they'd rather be anywhere else.. "if it weren't for the GFC wiping out half my super, I wouldn't have to be here.."

 

[jackbak]

Too many people dont get their super sorted out till its too late/not at all, so there isnt enough to survive on. And rather than let its citizens starve to death, the govt pays the pension regardless.

One of the perks of first world living. If you know there will be a pension handout safety net, wheres the incentive to be self funded and put the time/effort into managing finances.

I hear retirees talking about their super and how they have retired with 100k in it like that will last them forever. The rude shock comes a couple of years later when its gone and there are 20 years ahead of living

Don't forget that the generation retiring now are the first to ever receive super, the next generations will be retiring with much larger balances as they receive super at 9-12% for their entire working lives and will begin to take it much more seriously.

 

[DaveM]

Don't forget that the generation retiring now are the first to ever receive super, the next generations will be retiring with much larger balances as they receive super at 9-12% for their entire working lives and will begin to take it much more seriously.

My parents retired a few years ago (boomers) with over a million in super, from modest jobs as teachers. Just took planning and forethought.

 

[tobe]

the whole financial planning industry is focused on scamming the government and hiding assets so that retirees can receive a full or part pension.

I can see where these retirees are coming from, they paid their taxes, they should get a pension, but for gen x and y its a bit unfair, they pay their taxes,and they pay super (or forego income for super).

Im sure they will work out a scam when they near retirement age too....

 

[ok180]

You made the point people nearing 70 have one foot in the grave, so physically they can't perform laborious type jobs.

They don't need to do hard jobs.

We can become like the states. They have someone in the lift to press the button for you. Someone in the toilet to offer soap when your done. Someone in the department store to open the door or hold up a shirt to display.

Plenty of lil nick nack jobs for them!

 

[sanj]

I can see where these retirees are coming from, they paid their taxes, they should get a pension, but for gen x and y its a bit unfair, they pay their taxes,and they pay super (or forego income for super).

where does this thinking come from??

paying taxes doesnt automatically mean people should get pensions, i really dislike this hand out mentality. it should be for those who need it, not automatically for everyone. those people who paid their taxes received lots of govt services too, im not sure where this terrible thinking has come from but it is deeply ingrained.

i could be wrong but i believe unless people earn more than around $80k they cost the govt more in services etc than those people pay in tax so a significant % of people actually didnt rack up this magical "credit" they claim to have done.

 

[HotRod]

They don't need to do hard jobs.

We can become like the states. They have someone in the lift to press the button for you. Someone in the toilet to offer soap when your done. Someone in the department store to open the door or hold up a shirt to display.

Plenty of lil nick nack jobs for them!

Except they get paid via gratuities.

The Australian mentality would expect it for free and someone else can pay for it.

 

[HiEquity]

Take your money out, invest in in your own home either improvements or upgrading, a pension free asset, no CGT implications (to you), can take a reverse mortgage and pull out additional living funds if required and the government pays the bills with a now full pension entitlement.

I was already quite depressed Greg - I didn't need this as well. Now I understand what financial planners do for people - and the country!

For those people saying that people will have more in their super by 2050 due to longer periods of contributing and earning investment income, that is precisely the point. Treasury has modelled all these increasing contributions and even with them all included we still end up in a situation where 80% of people are on the pension!

Something is going very wrong if this is the case - Greg has clearly shown us why the PPOR needs to be included in some way in the assets test but also I imagine there are a lot of fees flowing out of super accounts to fund the financial planning industry. We could do a lot worse than putting a low limit on the fees that can be charged by super funds.

 

[Dazz]

The same as always...

You ask - what can be done about it ??

The answer is the same as it has always been.

Self sacrifice, living within your means, being frugal with your expenses, delayed gratification, making do, going without, getting up early, putting in the extra mile, having a cheerful outlook, possessing a can-do attitude, relying on your own endeavours, self study, a thirst for learning, emulating successful people who have gone prior.....the list is endless and unchanging.

Knowledge is not the answer. Knowing what to do is never enough.

Actually doing it.....and having the self discipline to actually keep doing it, especially when the road gets rough and all around you are mocking and deriding you.....that's the difference, and has always been the difference between those who need the pension and those who don't.

None of those things have changed between now and when Jan Somers first wrote her books. In fact, those things were in place well before Jan Somers was born.

Moaning about what the different Govt policies about individual tax rates and their differing policy settings will never you anywhere if you aren't prepared to do those things listed above.

Some people make huge noises. Some just get on with it, regardless.

 

[tobe]

where does this thinking come from??

paying taxes doesnt automatically mean people should get pensions, i really dislike this hand out mentality. it should be for those who need it, not automatically for everyone. those people who paid their taxes received lots of govt services too, im not sure where this terrible thinking has come from but it is deeply ingrained.

QUOTE]

Back in history, before superanuation, the 'compact' between the government and the workers was, you pay taxes, we will pay you a pension when you retire.

Thats where the thinking comes from. I dont agree with it necessarily.

 

[Deltaberry]

There's many problems with the Australian super system.

The first and foremost, is that all the big banks (as well as other minor institutions) completely rort the system.

For example, many finncial advisors out there would charge something like $4k-$5k to provide you with a standard template, for folks who have $50-100k in their bank account. And the standard template would tell you nothing except dribble.

 

[investor2009]

This. Same here. Can't go too far wrong! Hge only small downside is: I don't spend any time checking my Super' performance. Although I hace like.. $50k in there from 15 years work so it"s little wonder I think this way. Have made 10x this in property to date in half the time I might add. I also hate being chained down so money and early retirement option is a must

I must admit that all the financial planning that we do (my other half and I) basically assumes that there isn't a pension, and that we don't have any superannuation. That way, if everything goes pear shaped and the govt (whichever party is in power at the time) decides to change the superannuation legislation so they can access the funds, we are still in a reasonably sustainable position. Some call it fear mongering, some call it caution

 

[oracle]

Self sacrifice, living within your means, being frugal with your expenses, delayed gratification, making do, going without, getting up early, putting in the extra mile, having a cheerful outlook, possessing a can-do attitude, relying on your own endeavours, self study, a thirst for learning, emulating successful people who have gone prior.....the list is endless and unchanging.

Knowledge is not the answer. Knowing what to do is never enough.

Actually doing it.....and having the self discipline to actually keep doing it, especially when the road gets rough and all around you are mocking and deriding you.....that's the difference, and has always been the difference between those who need the pension and those who don't.

Couldn't agree more with the above.

It takes time to build up decent size asset base to retire on but once it's there the magic of compounding just makes everything look very easy.

Regarding super...I dont' mind it. It's a structure and the investments I make within my super are exactly the same I make outside super.

Cheers,
Oracle.