Housing Crisis... your fault, old people

Haven't read the article, but the productivity commission have been saying this for years!

It doesn't make much sense to have this sort of policy as it does distort incentives to downsize/etc, which hampers development of prime areas.

Pretty politically tricky area to touch though. You can imagine the catchy headlines about the government targeting older Australians.

 

It could be either (back in the day, living close to the city was not so desirable), but you're missing the point...

Little old lady #1 does not need the pension! It doesn't matter how she got there, the fact is she doesn't need it, so she shouldn't get it.

 

Jazzy

Part of the issue from the view point of the little old lady in Malvern is that she's probably work hard and smart most of her life while the other one hasn't , or has spent their money / smokes / os holidays .

As an example the parents of one of my daughters ex boyfriends , while they were having financial problems , fighting with a builder / taking him too court / being unemployed / buying cars for their kids etc were still going of 5 star holidays OS which we felt we couldnt afford . They're early 60's , living in a rented house etc now .

Personally I never have any intention on being dependant on the government and want to have enough money out side our healthy superfund to live a nice life style , but I do get frustrated at how some people spend all their money enjoying themselves and then expect to collect the pension ...

Cliff

 

Hi @juzzy

Truth is, my point probably sits about half way between where you and I currently stand. @See Change typed up a perfect example of what I was trying to convey...

 

I agree with you in theory, but little old lady #2 could've bought in Melton because she liked being in a nice quiet country suburb?

Who's to say little old lady #1 didn't inherit her Malvern house from her family? Maybe her or her partner used to work in Malvern 50 years ago so they moved there before it was outrageously expensive? Maybe they won the lottery and used all their money to buy that house?

How can you assume that the lady in Malvern worked harder than the lady in Melton? It's a ridiculous assumption.

You're worth what you're worth. Period. If you have the means to look after yourself, regardless of how you got there, you should look after yourself.

 

Raise the pension age to the point that they're too old to work and have had to spend all of your capital to survive.

 

Maybe you need a system of bonus points in life that determine what you get from the government .....

Long term employment , lots of tax gives you more points , loose them if if you buy expensive cars , os holidays etc ... Just dreaming

No work , spend all your money on pokies / smokes you get a basic retirement next door to datto .

One of my patients was quite disappointed recently when she couldn't get a Dept of housing place on the upper northern beaches and had to move further " west " ... Where did she end up ????

Milsons point ....

Cliff

 

@See Change - culture shock....

 

And once again, the pension is not a reward, its a safety net.

Cheers,
Inertia

 

I agree that you can assume someone's lifestyle by their PPOR.

However if two people in their life both earned 5M (making up a number). One person only holds a PPOR of 300k (keeping with the theme of Melton) and spent their money on overseas holidays, gambled, new cars every 4 years. The other person has a house in Malvern worth 2M and drives the same car for 15 years each time and rarely went overseas.

How can you say the person who did more with their money over time no get a pension when the other person wasted it. All you are doing is rewarding the wrong behavior.

This is why people hold onto the PPOR as it isn't tested for the pension.

My father is another example (he is unable to aged pension) he started his life with $50 in his wallet and wasn't given any inheritance. The only thing he got from the government was a uni education which he has paid more than enough taxes to repay.

In that time he has started a business, bought a business, merged a business. He has invested his money into property buying a block of units and about 6 other houses plus their PPOR. He has invested in shares as. However he went without paying himself for 6 months (didn't get the dole) when he was running his business but still paid the staff. We didn't go on an overseas holiday for 10 years and when we did it was to Fuji once or Bali once. So my father went without and sacrificed his time and money and gets rewarded with no pension.

 

They should not be targeted and there would be outrage if this did happen.

Let's not forget compulsory super was only established in 1992 most of these elderly people don't have any other assets other than their homes.


MTR

 

I won't get a pension, I am currently funding my own retirement, that was my choice.

I don't make the rules, but I wanted to retire in my forties not sixty seven.

It's not an even playing field, you make the most with what you have, but not everything always goes to plan, ie divorce, health issues etc
I am certainly not going to compare, cos there is no point to this

MTR

 

This is why I get annoyed when Gen Y get hammered in the media. We are currently funding the retirements of pensioners as well as funding our own superannuation. Yes the safety net will be there for us at a much older age, but we are forced to participate in a system that will make us less of a drain on society than the currently retired generation.

 

In this situation you'd still clear over $250k cash for that. It funds the equivalent of the age pension for 11+ years, saving taxpayers the same amount. I don't care if it doesn't fund all of their retirement - it still funds part of it and reduces the burden on taxpayers.

I don't see why it is up to me (as a young taxpayer) to fund pensions for old people when they have the capacity and means to provide for themselves.

Edit to add - there's already a palatable solution to this. It's called a reverse mortgage.

 

I don't like the media engineered polarization of the generations. In all probability the oldies wont leave their assets to the cats home - it will go to the next generation down. How lucky are they!

 

Pretty damn lucky.
However, just consider that if they end up in Nursing Homes this asset in most cases will need to be sold to meet hefty bonds and living expenses. No one really gets a free ride.

We have one of the best systems in the world, apart from I think its Denmark and Germany.

MTR

 

Do you think it's fair that there may be (likely is) taxpayers out there who will never be able to afford a million dollar home funding your mothers living expenses, when she can then pass on a million dollar asset to her children?

I think it's admirable she volunteers her time for others. I think it's great she wants to pass something on. But it shouldn't be at the expense of taxpayers.

I'm not for kicking the elderly out of modest homes when they aren't funded for living costs in retirement BUT in my view pension received should be taken out of estates assets.

 

PPOR absolutely should be included in the means testing for pensions. There isn't a good reason to reward people who planned poorly and there shouldn't be an incentive to hoard your money into an unproductive asset class because it is artificially valuable because it get's left out of wealth calculations.

That mentality is a big part of the problem that drives out of control housing affordability for the majority of Australians, if you have the assets to support yourself, you should support yourself. If that means downsizing, renting or reverse mortgaging your PPOR because you failed to plan accordingly and acquire the liquid assets required to retire, then so be it.

It's simply welfare for the wealthy, we already have far too much welfare being paid in Australia, we absolutely don't need to be paying it to those who are wealthy enough to retire comfortably by using their existing assets.

We shouldn't be paying welfare for sentimental reasons which are the only reasons that people have to exclude the PPOR from the calculations. Welfare should be 100% based on financial reasons because that is someone else's hard earned money that you're leeching.

 

Actually it should leave you about $250-260k.

If you are 60 now...and you chuck it into a tax advantaged asset and draw down at say 6%PA (15k) as a couple you should qualify for the full pension and associated benefits assuming you have minimal super.

Assuming the fully pension for a couple is about 33k and plus 15k you will have about 48k tax free plus all the subdised stuff (probably worth another 5k odd per annum).

That will probably keep you on candy till you start drooling at at the mouth around 77-80...

Wait till the libs sort this one out and put a cap on the worth of your primary place of residence...it is going to happen at some point. Don't think you will qualify for the pension if you have a place worth more than say $1m in Sydney....