The Pension Time Bomb: deficit is growing by $28 billion every 24 hours

Courtesy - visualcapitalist.com

Are governments making promises about pensions that they might not be able to keep?

According to an analysis by the World Economic Forum (WEF), there was a combined retirement savings gap in excess of $70 trillion in 2015, spread between eight major economies..

The WEF says the deficit is growing by $28 billion every 24 hours – and if nothing is done to slow the growth rate, the deficit will reach $400 trillion by 2050, or about five times the size of the global economy today.

The group of economies studied: Canada, Australia, Netherlands, Japan, India, China, the United Kingdom, and the United States.

Courtesy - visualcapitalist.com

See the attachments for the scale of the deficit.

Infographic - Pension-time-bomb by GentleChief posted 17th Apr, 2018 at 11:19 AM

 

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I am fed up with moral panic about older people and the pension. An individual analysis of the last two ABS population stats show that we do not have an aging population. It's a complete panic driven myth designed to divide generations (true up until the late nineties, no longer true).

My second point is this, we are not on the gold standard. The Australian government can afford to spend on welfare and pensions. It should be reasonably needs based though with some flexibility. There is an argument for reducing the asset test so that the pension money flows throughout the economy.

Thirdly, if they do not, what is the alternative? Mass retail failures? We have enough of those as it is.

Fourthly, welfare (and the pension is welfare) is something that the government agreed to provide under their human rights obligations and international law.

 

Easy fixed, you see there is a segment of the population - self employed, entrepreneurs, ambitious PAYG employees, people who have educated themselves, people who take risks, investors, those who put money away for a rainy day, spend less than they earn, sacrifice now for a nest egg one day.

Just need to tax the hell out of them all and redistribute what they have. Australia might even get ahead of the curve depending on the outcome of the next election...

 

I am deadset on getting the pension when i turn the pension age i think its 66 for me
I have paid taxes all my life to have it wittled away by this corrupt govt

I deserve it all back

I can never understand these people who have got so much they cant claim a pension or wint try

 

You have to be trolling right? Why are you here on an investing forum if all you want is the pension? It is the mentality of people like you that are the reason for taxes having to be as high as they are. We are on track to spend over $50 billion on the age pension and various related concessions this year.

Imagine if taxes were $50 billion a year lower - or even $25 billion a year lower. It might allow a significantly higher proportion of people to put away more savings into investments and super, which would grow into a large enough pot so the pension is no longer needed for them. They would be significantly better off with investment income and super than having the meagre pension.

You do not deserve it all back. Your current taxes go towards health, education, defence and security, roads and transport, the court system and law & order, amongst a myriad of other things, including disability support and the NDIS.

I need to stop before I start ranting.

 

The taxes you are paying are funding your lifestyle, your security and your doctor. It’s mentality like yours that is utterly antisocial, self centred and medieval.

We are reducing ourselves to animals if we are not happy that some of our taxes are helping those in need. Even animals help each other. Beyond disappointing when people with money become people without heart and soul

 

There's no "I" in team.

 

Sorry, but just spilling some beans here...

In reality, most Aussies will be broke or semi broke, after retirement.
Unfortunately.
With or without the States help.
And even with their current Investments.

Even those who have 1,2 or even 3 properties.

REALITY is like a pie served piping hot.
Can drool, but can't eat.

Asset Rich but Cash flow Poor.
Terminate the asset and pay CGT.
A very large % gone to Tax office. (sometimes even 48% gone)
Seemed like a BIG Asset that was owned. With a huge GG.
And then No income,

Some go into the Golden retirement, thinking life is going to be good.
With 3 properties behind them.


See the Free cash flow of Rents after Expenses - Interest, property maintenance, Council etc. Use permutation & combinations of vacancy etc.

(one might say my property is Interest free, which is good,
but the REAL question is how many properties do you have that are interest free?)

You will need a good few at least, "Interest Free"
Sydney/Melb type properties.

To sustain a $8000 household income per month today.
(after expenses)

And nothing can be done when you are 60+.
Yes, ofcourse life has been good.
With income from Job, Security, the best country to Live in etc.

But the future can be scary, without that monthly income...

 

What’s not to understand?

We don’t get any pension, we are far over the asset and income limits. It’s not about trying if you are not eligible.

But I would far rather live on our income level than on the pension.
Marg

 

Well, that’s wrong to begin with, so long as you have held the assets for over 12 months.

Even on the top tax scale you will pay no more than 25% of the net gain after all allowable expenses.
Marg

 

There is no “we” or “us” in team either.
But there is “tea”

 

People who pay the most tax get nothing, if you are lucky you may get a few years in your life where you are deemed tax free.

That’s why people leave their properties sitting there empty and rotting - so they can get the pension

 

The simple truth to be acknowledged.
Retirement is not a Glossy brochure ma'am, if it's not planned & executed well.
Whatever that investments be.

Good luck.

 

The simple truth is, if you can't get simple maths/tax right you can't get the bigger picture right.

 

You are right.
Humbly, I am poor at Math.
And at Tax.

These have always evaded me.
Thanks for highlighting!

 

Congratulations on such an incredible CV.

As I have been selling some property on retiring I will give you an example of figures using the current tax rate on properties held longer than 12 months.

If the CG is $200,000, discounted 50% to $100,000, the tax would be $24,632,
a tax rate of 12.316%

I'm incredibly surprised that with your postgraduate Master's degree in Statistics and Banking that you would have to ask me to give you the maths for such a simple CGT.

Below is the current tax rates should you require this help again.

Current Resident Tax Rates 2017 - 2018
Taxable income Tax on this income
$0 – $18,200 Nil
$18,201– $37,000 19c for each $1 over $18,200
$37,001 - $87,000 $3,572 plus 32.5c for each $1 over $37,000
$87,001 - $180,000 $19,822 plus 37c for each $1 over $87,000
$180,001 and over $54,232 plus 45c for every $1 over $180,000

 

Agreed Sir, @Ran Gus

enjoy your day!

you have proved us, a genius....

Have a great day ahead. Sincerely.

 

Incredible numbers,

 

Bought in 1995 inner Melbourne blue chip suburb, you can check the growth rates.

Nothing exceptional about the numbers time and compounding does the heavy lifting, that should be obvious to you with your CV.