Retired, Equity a plenty, Living off the pension.

In the local paper an 82 year old resident has been offered $26 million for their home which they have lived in for over 50 years. I don't know they circumstances however I would assume they are receiving the pension.

No Cookies | Daily Telegraph

 

Not their fault government decided to build a new train line and rezone the land her house is on.

 

I don't understand this. I would take the $26 million. I could have a LOT of fun with $26 million

 

We've had a massive thread on this before but my feelings are 100% unchanged.

The main residence should absolutely be included in means testing for the pension, no ifs or buts.

The problem is that we need to set up an equitable system that doesn't include forced sales or drastic measures. The best solution, imo, would be for the Government to have a reverse mortgage system setup so that people can continue to live in their home but not be a drain on the system and the equity in their house would be used to fund their retirement. You could set a minimum/maximum pension based on age/equity as is currently done with super funds to ensure there is no exploitation/waste and it would simply mean people paying their own way.

The country is in massive debt that is only worsening and the aged pension is one of the biggest expenses that there is when there is just no need for that to be the case. Yes, it asks for the elderly to give up their sense of entitlement and pay their own way but given the situation they've put the country in I can't help but think that is a reasonable expectation.

I also think it's a major reason why land tax (also should not have a main residence exemption) should be increased to replace stamp duty entirely. Predominantly so that you remove a major cost of downsizing but also to add an extra incentive to do it. You don't want an 85 year old retiree sitting on 2 acres 3 minutes from the CBD while the 25 year old taxpayers are having to travel 3 hours, it's a thoroughly unproductive system we've created.

 

Disagree. This will not help the housing situation where a single retired person is rattling around in a 3 or 4 bed house on a dual occupancy sized block, 5 mins from the CBD. These home should be occupied by young families, or split up and sold to young couples who are forced further out and have to travel more because of housing underutilisation.

One issue here is if the retired person did sell up, where do they move to? Previously, there were not even allowed to occupy a granny flat nearby because of stupid state government regulations. At least they are allowed to now but there is still a lack of diversity in housing choices in the inner-mid and inner ring suburbs. Look specifically at suburbs like Bayswater that have plenty of older houses on splitter blocks... but if the retirees sell up, where do they move to? Should they have to move away from their friends so that someone else can have their house and land? The government needs to relax the rules a bit to allow housing to be provided so that retirees can age in or near the areas they have lived all their lives.

When superannuation tax concessions exceed the aged pension in the next couple of years, will you still blame the elderly for this mess? Maybe we all need to give up our sense of entitlement if the government is to ever balance their books. There is no point reducing the aged pension only for superannuation tax concessions to grow exponentially and to far outstrip (in cost) more than we ever paid out in pensions.

Agreed. Get rid of stamp duty. It is a huge barrier to downsizing and an unproductive tax. Agree also we have created a thoroughly unproductive system.

 

I agree with taking the money... but many 82yo (not all of course) would value their memories, which are associated with place (sight, smell, etc) and no upheaval in their life far more than any money. Even $26m. And I respect that and hope they are able top stay in their home for as long as they want.

 

I agree, but I don't see anywhere where the old are keeping out the young in the manner you're talking about (ignoring the 2ac within 3mins of any CBD, except by corporate jet with parachute ). Why should the young get a preference as to where they live over the old? What if the old have been productive for 60 years, started 30 profitable businesses, have 200 patents to their name, etc. Exactly at what age is an older person "unproductive"?

 

Everyone is different. My parents are close to that age, building a new house and taking trips all over the world. They are having a great time. That's what I would do in her situation. Take the money and enjoy it. But then I don't get attached to houses, so...

 

If we are going to support this idea of culling those who offer little to no human capital, then I feel we should widen the net from just the elderly to all those who offer little to no value to our society.

This list would include but not be limited to:

1. The Elderly
2. The Sick
3. Everyone in prison
4. All politicians
5. All public servants
6. ....

 

Have only read half the discussion but my 2c are.

Any form of welfare is for those in need only.

Just because you work hard all your life doesn't mean your are entitled to hand outs from the government for life.
Same as just being born in Oz should't entitle you to hand outs for life if you decide not to work.
Our taxes go towards sustaining the lifestyle and amenities that we expect and demand, not just to be handed back to you when you retiree.

Retirees should not be forced out of their homes.

But at some point a PPOR must be taken into account. Is that $2m or $5m or $20m? I don't know.

Same goes with un taxed super, I think the cap should be a bit higher than current, say $3m. But super and PPOR cannot be used by the wealthy to avoid tax and sponge off the government.

Just did some quick sums and based on 2015 average wage (not average full time, average Australian wage), 2.5% inflation, super contributions at 9.25% and a return of 7%pa. Someone entering the workforce at 18 today earning an average wage and working until they are 65, will have a super balance in excess of $2.6m.
Which sounds great but at the same level of inflation $1m today would be worth $3.2m.
However it is sufficient to provide a tidy income by spending the income (interest, rent, divs) alone.
If the average person also owns their own home, then that sounds like a fairly comfortable retirement especially if both partners have similar.

A few notes;
* Super contributions should continue to increase as planned.
* This is on the Australian average wage so is in reach for the average aussie. Obviously some will earn less than this and that is what the pension is for.
* This is for someone entering the workforce today so will take some time to come true but as mentioned previously within ten years most retirees will have had super for their whole working life.

 

I don't disagree but there has to be a balance between having people to pay their own way and forcing them out of their home. This particular element is why I believe that land tax should be increased and absolutely shouldn't be on the main residence. Those who can afford to live in the house they are in will have no issues whatsoever and those who can't will downsize to something more appropriate instead. Win/Win and it actively encourages people to not just buy the biggest house possible at the expense of actually preparing for a self funded retirement.

This is a massive issue but it's not exclusive to old people. It's a massive symptom of our hatred towards urban living and infill and obsession with sprawl, perhaps if we have multiple generations being negatively impacted by the sprawl instead of it being a ponzi scheme on the youth where we just push them further and further out with each generation we might be more unified in fixing it though?

Hey, if you can find a post by me that supports the current superannuation tax avoidance scheme we have, by all means go for it, otherwise know that I agree entirely with you. Super as we've designed it is a cost in addition to the aged pension, we've managed to create two massive costs to try and fix a system that is largely created by entitlement and a ridiculous exemption on the main residence from means testing. Including it in the means test is a literal two birds with one stone solution. We get a significant portion of aged pension exploiters off the age pension instantly, greatly reducing that cost but we also remove a system that disincentivises people from paying their own way and creates a large part of the whole super mentality that it only works if it's a tax dodge as opposed to preparing for your own future because it's right and reasonable thing to do!

The super system and the incentives included are very justifiable (they're currently extremely excessive regardless) if superannuation is actually achieving it's main goal of greatly reducing the age pension, that it doesn't do that just about at all while costing billions is why it's an issue.

We need to move forward away from the old archaic taxes that we base our system around (income tax, stamp duty and payroll tax should be the first 3 targets) and instead use "productive" taxes (GST and land tax should pretty much replace those 3).

Bit of hyperbole in the 2 acres, although there are plenty in Perth that are close to that. This isn't really a young vs old thing with the land tax, it's having people who aren't working sitting on the land in the areas with the most access to commercial areas, that guy that has retired has no reason he shouldn't be there at all and if he's done that well I dare say a few grand of land tax isn't going to change things one iota but if it helps free up even a handful of properties to be used by those still working and increase productivity then it's a positive. Commuting is rapidly becoming one of the biggest financial costs to the economy, we have literally billions of dollars of productivity sitting gridlocked in traffic so that non-workers can sit by and sip their tea as all those people have to roll past their properties. You ideally want those working to live closest to the CBD and have the retired move towards the beaches or more rural areas, there will always be some retirees who prefer the city and there will be some workers who prefer the opposite but ideally you should be designing systems that promote the best utilisation of our finite resources.

 

@wogitalia seems like people don't want different housing options permitted in their area until they need them. Trying to put in anything that sniffs of density causes locals to complain loudly to council and oppose, oppose, oppose.

I don't know how the State Government and local Councils can change the conversation but we desperately need a better solution to what we have now. I'm thinking of Shelley Street in Melbourne, when I had an IP for a while. It is a relatively short street but on just that street there were: small old houses on big blocks, townhouses on small blocks, single bedroom dwellings, single storey units... all sorts. In Perth, you would be lucky to get 4x2, 4x2, 3x2, 3x2, 4x2 in the same street

 

It's very much a Perth thing.

We hate change. We hate anything if the Eastern States did it first.

Our calling card is we're a big country town and it doesn't matter how big we get, we don't want that to change. I hate that aspect of Perth but it's probably the defining trait of the place.

 

In the meantime, families are enjoying their "affordable" new houses out in Yanchep and spending a fortune on fuel to get anywhere.

In the meantime, there is plenty of land in Bayswater (for example). It's just not able to be used efficiently because of arcane council zoning regulations. In reality, councils are artificially restricting supply. People carp on about the impact of negative gearing on house prices but its impact is miniscule compared to council restricting supply like this.

I was looking for a block to build on in Bayswater a couple of months ago. I found a scrappy 327 sqm block on the market $359,000. Seems absurd to me! Under contract now of course...

4 Williamson St Bayswater WA 6053 - Residential Land for Sale #201453338 - realestate.com.au

 

Taxation is not a bank that one pays into and withdraws from. Some of the 'cost recovery' posts here are disturbing.

I've paid way way more tax than I've got back in benefits and services so far, and that's only likely to accelerate. Should the govt refund the tax that I paid for the services I didn't use over my lifetime when I die? I'm ok with paying for the less fortunate.

Now, where's the discussion of dole bludgers, tax cheats and middle-class welfare?

Vote one - cakes and sausages!

 

Ok here is my out of the box solution.

Why not just abolish the age pension for anyone born after today? As compensation, the government pays a baby bonus of sorts and opens a super account for you and seeds it with $5000 in an ASX 200 index fund (no parasitic fees from fund management industry eating it away). By the time you are 60, combined with your super from employment contributions over your life it will have compounded into a decent nest egg.

Instead of spending hundreds of thousands per person on the age pension down the line, the cost is $5k upfront per person.

Each year (from now out to 2076) the cost of the age pension to the budget progressively glides down as the oldies die off, and most people today will have some super... meaning they will only qualify for part pensions... not full ones.

Oldies who are currently draining the system can continue to do so (so be it, the young lose this debate anyway every 3 years at election time), and the budget will be 60 to $100 billion+ a year better off in future...

Fire away.

 

Yes, I reckon we kick these oldies under the bus.... how dare they own a property worth $2m... well it aint gonna happen anytime soon

 

Kinda strange that you chose to hone in on that specific comment and disregarded the preceding comment of "I mean from a purely utilitarian point of view" and the following comment of "but that's not a world I'm keen to live in."

Its also pretty unreasonable to entirely eliminate any sort of utilitarian idea from discussion given that all policy is essentially about finding an acceptable and achievable middle ground between utilitarianism and deontological ethics, especially when it comes to healthcare and welfare.

" The government can only help so far. It is budgeted with resources to provide basic infrastructure available to all and not unlimited resources earmarked for the few."

Define basic resources, it sounds like you're still interested in drawing lines, just at a different point to a completely utilitarian approach. At some stage you're still saying "we aren't going to pay for X" where X could potentially save or dramatically extend their life.

"If a person wants to be suicidal, ultimately he should succeed"
According to who / based on what? How can you objectively say that its acceptable? Again where do you want to draw an arbitrary line of "okay we should attempt to minimise suicide by doing X, Y & Z, but if they are REALLY keen, yeah let 'em go for it"?
Its an incredibly nuanced issue and I don't agree with statements at all that yeah if someone really wants to kill themselves, they should be able to. Not every situation is comparable. I have absolutely no issue with someone who is say, 85 and in pain wanting to go quietly in their sleep rather than suffering and dying some slow and miserable death from something like cancer. I would actively help them if I could (knowing full well that its currently illegal to do so), but if say a 35 year old friend had just lost their wife and kids in a car accident and wanted to kill themselves, I'm going to do everything possible including infringing on their personal liberties to avoid that. I'm not going to sit back and go, "look you're really upset and not thinking rationally, but I respect your right to kill yourself", because they are entirely different situations. I can also acknowledge that some people feel that neither situation is appropriate because of their own beliefs e.g. that suicide is a cardinal sin, and I can't say that my view is objectively right / theirs is wrong or vice versa. Ethics and morality can be incredibly subjective.

 

Well, we do not need to be crass in discussing issues. Be calm and not panic first.

 

For now and the foreseeable future, sure. Deep Machine learning and AI are advancing and will continue to do so. Personally I don't think its going to happen in the next 100 years, (more like 200-500) but assume we don't nuke the hell out of each other, why wouldn't we continue to advance to a stage where machines can write code and "invent" better than we can?