Big demographic changes ahead
- Thread starter trendsta
- Start date
Preferential for who? I thought it was the same for all.
It's not "bad luck", it's a choice.
Up to 25k to buy a house handed out. Did you take advantage of that?
I never had any FHBG as most BBs didnt. It's tough life being a whinger.
Investors pay taxes on top of taxes multiple times, and that "stuff" has to be paid for the only people who can be slugged are those with assets.
It's the way the system is run that needs to be changed, ie better and much smaller government.
At $18 billion for the last financial year - wouldn't call middle class welfare chump change.
http://www.crikey.com.au/2011/05/12/why-labor-now-owns-middle-class-welfare/
I'm in both camps ... I believe those who have worked hard for assets deserve to have them - but - at the same time - I believe after retirement they have to make those assets now work for them so that they are not government handout reliant.
This may mean downsizing the family home etc.
We are already seeing massive deflation in house prices in USA plus drop in consumer demand.
The baby boomers are realising they must save more for retirement. They have stopped spending and started to save.
The same situation may happen in Australia.
The big difference is housing is that USA has non recourse loans. Home owners can simply walk away from their mortgage and allow lender to take any loss. In Australia lender can claim lossess from borrower after property is sold.
Mortgage insurance covers the lender and mortgage insurer can then claim any payout from borrower.
That's the paradox. BBs are damned if they do, damned if they don't.
If they stop spending money to save for their retirement, the service economy collapses, the welfare system goes broke and they have to save even more.
If they DON'T save and enjoy la dolce vita, the next generation will refuse to fund that sweet life.
It seems they are expected to exhaust their savings and capital before registering for transfer payments, but then the heirs will be left with nothing so must start saving too. They must actively chase high investment returns and some will choose res property as the vehicle, pushing up prices.
Don't you reckon it is time for clear thought and some understanding? Less bitterness please, it gets hurtful
If they stop spending money to save for their retirement, the service economy collapses, the welfare system goes broke and they have to save even more.
If they DON'T save and enjoy la dolce vita, the next generation will refuse to fund that sweet life.
It seems they are expected to exhaust their savings and capital before registering for transfer payments, but then the heirs will be left with nothing so must start saving too. They must actively chase high investment returns and some will choose res property as the vehicle, pushing up prices.
Don't you reckon it is time for clear thought and some understanding? Less bitterness please, it gets hurtful
Sunfish, I wasn't saying that the Boomers are or were selfish, but rather that they were lucky to be at their peak earnings capacity as the housing boom started. In short they were in a position to take advantage of a once in a generation buying opportunity.
Pensions are more of a British issue. Historically companies have provided long serving staff with an index (inflation) linked income in retirement based on their final salary.
Due to a combination of cutting back on investments in these funds during the nineties due to the booming stock market, a tax raid by the then Chancellor Gordon Brown, and the pesky fact that we're living longer, these became unaffordable.
The switchover point was in the mid-nineties, and the schemes were closed to new entrants at that point. I've got a friend who hung on in a job he didn't really like for ten or fifteen years because of this.
I'd assumed that the situation was similar Down Under, but I think that Super is set up differently. Australia certainly spends a lot less on pensions (roughly half) than the OECD average, so I'm assuming that there's a lot more saving done by the population as a whole.
I don't like middle-class welfare either. Strikes me as inefficient to tax someone, and then return it as payments.
Pensions are more of a British issue. Historically companies have provided long serving staff with an index (inflation) linked income in retirement based on their final salary.
Due to a combination of cutting back on investments in these funds during the nineties due to the booming stock market, a tax raid by the then Chancellor Gordon Brown, and the pesky fact that we're living longer, these became unaffordable.
The switchover point was in the mid-nineties, and the schemes were closed to new entrants at that point. I've got a friend who hung on in a job he didn't really like for ten or fifteen years because of this.
I'd assumed that the situation was similar Down Under, but I think that Super is set up differently. Australia certainly spends a lot less on pensions (roughly half) than the OECD average, so I'm assuming that there's a lot more saving done by the population as a whole.
I don't like middle-class welfare either. Strikes me as inefficient to tax someone, and then return it as payments.
Okay - read a lot more posts since my last one.
Let's look at this ...
Granted, the boomers had free university - but they also go no assistance to help with purchase of books (can cost several thousand a year), living away from home etc. You also didn't need a uni degree to become a bricklayer in those days either
Perfect example of gen Y (IMO). Stepdaughter came to me right in the middle of GFC1 for some advice about buying a unit on the inner edge of middle ring major city. I basically found her the place, spoke to the broker re finance, she was entitled to around $14k FHBG ... spent her deposit money on a new car.
Same unit now worth around $50k+ more ... car now sold (carless) and currently spending up big on jewellery, clothes, shoes, overseas travel and going out 3-5 times a week. Rents in Sydney - but insisted on a studio in Glebe with a pool in the complex. Whinges about the high cost of living.
Most boomers I know sewed their own clothes, scrimped for a 30% deposit on a 3/1 fibro down a gravel road (now prime location), a huge lifetime trip was to the capital city in their state, one car (if at all), had a vege patch and a night out was to the local once a month.
Now - before you start - I am an X so are perfectly positioned to see both sides.
Granted - with the advancement in technology people are living longer and this needs to be addressed. Not by topping them off - but rather by increasing the retirement age (if not fully self funded) - and I believe, at some stage, there will be a reversal of the medical lengths currently undertaken to keep someone alive in their older years.
Personally, I don't understand why we spend billions a year to pump the very elderly full of medication and organ assistance, so they can lie on a bed waiting to die. As a society we are so removed from death that we don't accept it as an inevitable part of life.
But this debate will never be resolved. Every generation thinks they've got it harder than the one before ... but if you are a history buff, you will see that every generation has a high standard of living than the one before, so expectations go up and ergo they think they are hard done by.
Let's look at this ...
Granted, the boomers had free university - but they also go no assistance to help with purchase of books (can cost several thousand a year), living away from home etc. You also didn't need a uni degree to become a bricklayer in those days either
Perfect example of gen Y (IMO). Stepdaughter came to me right in the middle of GFC1 for some advice about buying a unit on the inner edge of middle ring major city. I basically found her the place, spoke to the broker re finance, she was entitled to around $14k FHBG ... spent her deposit money on a new car.
Same unit now worth around $50k+ more ... car now sold (carless) and currently spending up big on jewellery, clothes, shoes, overseas travel and going out 3-5 times a week. Rents in Sydney - but insisted on a studio in Glebe with a pool in the complex. Whinges about the high cost of living.
Most boomers I know sewed their own clothes, scrimped for a 30% deposit on a 3/1 fibro down a gravel road (now prime location), a huge lifetime trip was to the capital city in their state, one car (if at all), had a vege patch and a night out was to the local once a month.
Now - before you start - I am an X so are perfectly positioned to see both sides.
Granted - with the advancement in technology people are living longer and this needs to be addressed. Not by topping them off - but rather by increasing the retirement age (if not fully self funded) - and I believe, at some stage, there will be a reversal of the medical lengths currently undertaken to keep someone alive in their older years.
Personally, I don't understand why we spend billions a year to pump the very elderly full of medication and organ assistance, so they can lie on a bed waiting to die. As a society we are so removed from death that we don't accept it as an inevitable part of life.
But this debate will never be resolved. Every generation thinks they've got it harder than the one before ... but if you are a history buff, you will see that every generation has a high standard of living than the one before, so expectations go up and ergo they think they are hard done by.
Lets see, in Australia ... there was a boom around 1988 (prices doubled) ... a boom peaking 2003 (prices doubled) ... a mini boom in 2009 ...
They were the ones I lived thru and I'm only an X. Can't see it being a "once in a lifetime" to me.
Perhaps Sunfish could name a few more years of booms. I'm sure there were some in the 50's - 60's - maybe even the 70's.
I don't know of any boomers on a defined benefits scheme here. Most are self funded. Some on a part pension. Maybe it's just the group I circle in.
there was a timely video on this topic on Bloomberg yesterday.
http://www.bloomberg.com/video/83555894/
They interviewed this guy Harry Dent who has predicted a fall on the S&P of between 30-50% this year. Based solely on the changes in demographics.
He makes some very good points.
Essentially the share market / Economy / Housing prices are all dependent on consumption.
So when you have your biggest earners in the economy who are winding down on spending, because their kids have left home, they've slowed down the home reno's and are seriously saving for their retirement consumption drops and the retail and service industries suffer as a result.
In addition to this as more Australians become eligible for the aged pension the burden on tax payers will also increase, resulting in either high taxes or reduced services. this in turn also reduces consumption.
It doesn't have to do with BB selling assets down on mass, which causes a drop in asset prices, its the drop in underlying consumption that will cause prices to drop.
http://www.bloomberg.com/video/83555894/
They interviewed this guy Harry Dent who has predicted a fall on the S&P of between 30-50% this year. Based solely on the changes in demographics.
He makes some very good points.
Essentially the share market / Economy / Housing prices are all dependent on consumption.
So when you have your biggest earners in the economy who are winding down on spending, because their kids have left home, they've slowed down the home reno's and are seriously saving for their retirement consumption drops and the retail and service industries suffer as a result.
In addition to this as more Australians become eligible for the aged pension the burden on tax payers will also increase, resulting in either high taxes or reduced services. this in turn also reduces consumption.
It doesn't have to do with BB selling assets down on mass, which causes a drop in asset prices, its the drop in underlying consumption that will cause prices to drop.
The baby boomers are in big trouble in the US. The situation in Australia is much better. They don't have compulsory superannuation so most of them have minimal savings for retirement (and that's leaving aside the many that have lost their job since the GFC).
Their aged pension system (social security) is in trouble due to the US's large sovereign debt. Still they let irresponsible politicians from Reagan on rack up huge deficits in good times and bad so they've largely brought it on themselves.
well said. we are self funded but also have some paid employment. we pay tax at the 3 levels of govt and receive no govt handouts or seek them.
we see the amount of spending and wasteful spending by the federal govt, in particular to be a cause of real concern.
perhaps there will be a change in policies when the population 50+ increases and has a bigger voice? greater political power?
there are noises being made about quality aged care at present, user pays already happens to a degree.
that is another can of worms, particularly in terms of the workforce in that area.
building beautiful new facilities does not mean care will be any better, without well trained and supervised staff,
it will just be big nice looking warehouses to park the frail and vulnerable until death.
it needs to said that so called aged care facilities do not just house the over 60s, many are younger with chronic impairments. they need to be cared for and often have no assets/income to fund their care.
none of this is easy, and it is not just a matter of age alone.
Harry Dent's been discussed on here a fair bit. My opinion remains that he has proved good at picking market direction, but very bad at picking magnitude.
Yes, that's why I said rort. A worldwide rort. In australia, if your holding period is one year and one day you pay half the tax without erosion from inflation. This favours the wealthy, and investments with low frictional costs (eg.shares). If you structure your investments carefully you could pay very little CGT.
The tax treatment of super is very generous and it's amazing that once you get it in there and reach retirement age, you effectively pay no tax on earnings. Obviously if you are nearing retirement age you could structure your investments to pay very little tax on income. This favours the wealthy retired a lot in my opinion. It's a sort of bonanza and if I was wealthy and retired I'd be wondering how long it could go on for.
Oh I wouldn't worry too much about it. Superannuation law/policy changes so frequently that you can't rely on anything beyond a year or two. Plus when the BBs start to retire you will see the government very quickly change its policy on low-taxing of superannuation.
If you look under Middle Class Welfare the sum will be zero, I'd guess.
One of my emails said the FTB was 18 bill. Would you like to guess at child care?
It was an article titled Labor owns the FBT or similar.
That's what I found too ... and, surprisingly, middle class welfare has actually increased at double CPI under the current Labor government.
Contrary you just resent the older geberations for your own shortcomings which you justify as "bad luck". It has never been easier to buy a house, start a biz, make lots money even as employee. I would have been much better off if I was starting out now.
--
The baby boomers economic boom has been over for a while but the media hacks keep flogging the dead horse.
Harry changes his predictions at the same time he changes his underwear.
His book was interesting and insightful, his conclusions very wrong.
--
The baby boomers economic boom has been over for a while but the media hacks keep flogging the dead horse.
Harry changes his predictions at the same time he changes his underwear.
His book was interesting and insightful, his conclusions very wrong.
Similar threads
