Retirement Living Standards Aren't So Bad........

Haha love it. Not sure if that's a spelling mistake or not, but from now on I'm gonna use it.

Sash looking forward to reading about your exit strategy.

 

I'll let you know when I have figured it out..not as easy as it seems not from a monetary perspective but more like how to develop a sustainable and consistent source of income.

The other issue how to optimize tax leakage.

 

My dad is in his 70s, worked full time from the age of 16 until retiring at 67 years old. That's 51 full time years as an honest taxpayer.

If I recall correctly, he receives around 15k pa pension from the government and under 10k pa additionally from his super. He can pay his bills and run his car, but he has to budget like crazy to cover unforeseen expenses, repairs, etc. Heaven forbid he ever falls ill and needs medicine that is not covered by the PBS. Compared to the income and lifestyle of the majority of Australians, he is more existing than living.

Retirement for many Australians is far from 'comfortable'.

 

@SirDingo - so your father gets a part pension?

From Dept of Human Services

Single pensioners: $873.90/fortnight ($22,721.40)
Couple: $1,317.40 ($17,126.20 each)

 

Just wait for the end of 2016 when the pension rules change, most people dont realise the impact its going to have on them and screams will be heard from everywhere.

Age Pension assets test: 300,000 retired Australians to lose some or all entitlements - SuperGuide

 

Unfortunately the only "reliable and consistent" source of income is withdrawing the same amount of money each week from a savings account. That is of course until the pile of money in the savings account becomes depleted.

Share dividends etc vary. Bank interest rates on offer vary. Rents fetched on properties vary (due to fluctuations in asking prices in the area, a vacancy, etc).

They key is probably to ensure that upon retirement, there is a pile of cash big enough to sustain you for a period of time if the expected returns on investments are not forthcoming. This allows time to liquidate some of the asset base.

 

The key to this is planning - if you haven't thought past your next paypacket what chance have you got?

 

Quite right. I'm not convinced that just forcing people to pay extra into super is the answer either, unless retail funds are more heavily regulated to ensure balances steadily increase and cannot sustain spectacular losses .

 

Personally, I wouldn't touch any retail fund (I have had several poor performing accounts prior to the introduction of choice of fund) & some industry funds probably aren't perfect either.

Super allows me to diversify into equities, REITs & wholesale funds without all the hassle of self-managing) - provided of course you understand who is managing the funds and their investment strategy is compatible with your own.

 

Agreed @Scott No Mates . However the bulk of the population will likely always opt for the hands-off approach of letting someone else manage their super. Most folks haven't even got a clue which fund they are with let alone how much their balance is, or how the fund is performing.

 

One issue with super is the penalties which apply for not withdrawing the minimum amount (big problem when they legislate the % to be drawn down annually but you don't need that much - a sad problem to have).

 

Retail funds are terrible - I moved to industry funds about 10yrs ago and now I have a SMSF. I'm going to be in control and provide enough in retirement. I was of the view from the age of 20 that my super should be my fund of retirement income no matter what the govt policy was going to be *but the writing was on the wall 20yrs ago. I believe that most people born in the 70s should be capable of retiring off their super fund if they put some forethought into it's investing style.

The current govt pension scheme is unsustainable and needs to be changed together with the retirement age simply due to the fact that we are living longer and it's too costly for the govt to fund people's retirement for 30+ years. This has been on the cards, again for years.

I don't particularly want the govt messing with the age that I can access my Super money if I can prove that it's enough to fund retirement for 30+ years but the laws around how people can spend their Super are quite lax and many people can access lump sums that severely degrade their balance. Leaving them with no option but to go on govt pension once that money runs out.

 

Agree with you there @Westminster - there should be minimal access to lump sum upon retirement (sure some may want that OS trip, pay off mortgage, buy new car and shiny zimmerframe but a cap being a % of funds wouldn't go astray ie. if you take an annual payment you must take 4% minimum but you can withdraw the lot (where's the logic).

The age at which you can access your super should remain untouched - you may wish to retire/semi retire and keep contributing whilst drawing tax free funds

 

Yes, because Australian governments, both past and present day have excellent track records of keeping funds for future use for things like education, health and infrastructure and could be trusted to not tamper with those withheld funds on our behalf for a government implemented pension to all Australians.

Do you think any government, present or future, if they implemented your suggestion they would not charge fees for the service, tax it, always guarantee returns, ride out market variables in good times and in bad to keep your pension safe?

I've never heard of anything more absurd than this suggestion.

pinkboy

 

I think super is a waste of time, for me. I've been self employed for the last 13 years and haven't paid into super. I've dwindled it down to zero, after paying for income protection insurance from my super.

I prefer to have investments outside of super, and don't have to wait another 30 years to access the funds for retirement.

 

@pinkboy (should be rude boy)

Forcing me to give my money to private companies to 'hold on good faith for me' until I am 60+ is what I find absurd...the system has been proven to be corrupt and unaccountable. It is unconscionable to force Australians to be part of this crap system.

To compare, Government defined benefits super is the best around. You don't have to think so and you are entitled to your opinion - just as I am entitled to mine. But I know where my money is and yes it is guaranteed. Maybe just ask yourself why do politicians and top public servants have the government schemes and not private ones? And yes, to answer your ridiculous question - of course the government run ones charge fees. What fairyland do you live in where they wouldn't?

I would rather the government be held accountable and responsible for providing for the elderly than greedy private super companies who are solely out for profit.

 

not all elderly receiving pensions today had the ability to funnel money into super, I think it was introduced in 1985.??

 

I once had the same view, however we have SMSF and now use it as a vehicle to reduce tax. I am still learning and take advice from my accountant. Of course our situation/strategies with regards to property may be very different.

 

Boo hoo! Personal attack aside:

You aren't 'forced to' 'give' your contributions to private companies. You can take control of your own super via SMSF - so there is an option out there.

You're making out there is only 1 evil option. Making ridiculous claims that Superannuation is a 'scam' as your opinion clearly shows you don't fully understand key concepts that make our system one of the soundest in the world. Granted its not perfect, but its generally sound and effective. It is a forced saving, mostly from employers, so its not like its being stripped from your weekly wage anyway. And, if you're not contributing to it from your own earnings in line with what you do need in retirement, well its entirely your fault, and the government has to prop you up anyway via pension. We're lucky in Australia we can have our cake and eat it too at the moment.

This is how ridiculous your last statement is: Effectively, you're saying you would rather a debt ridden, bleeding government who don't know what they are doing with their own income from term to term, let alone looking after yours - hold higher experience than that of Superannuation companies, who effectively invest peoples super for a living (for a profit) and know what they are doing (*to a degree).
Yeah, makes total sense.


pinkboy

 

It is not unconscionable - it is law. You have choices - fund of choice not just the employer mandated fund.

The defined benefits scheme was closed to new entrants back 20 odd years ago - it is grossly unfunded & underfunded.

Plenty of industry funds around or start an smsf yourself and you can rake in your fees.