What is your backup plan??

Thats it. Its actually insane imo. It makes no sense at all to me. You work your entire life, retire broke and reliant on the pension which is peanuts. And you have to live frugally. Whats the whole point of working 40+ years then? This reminds me of one of Einstein's quotes:

"Insanity is doing the same thing over and over again and expecting different results".

 

Having 4 kids we generally don't take big risks.

I would dedicate myself completely to work and put time into helping Chrissy build up her business. Might consider investing in precious metals and invest in a lot of 'quality time' on the beach!

I've been in my job for 9 years now, whats another 35

 

Business, naturally.

 

Luckily you don't have to take big risks to invest, some do, but you don't have to. Plenty of examples of big risk takers losing everything whilst the more conservative make more money than they'll ever need. Can also work the other way around

 

I dont find the younger generation to be any more entitled than the baby boomers; let's not forget 90 odd percent of boomers will retire on the govt teat despite living through many significant booms and periods of major expansion and opportunity in this country.

The entitled nonsense is unfortunately a lovely aussie trait

 

My parents saw the writing on the wall 20+ years ago. Their friends parents retired and because they owned a farm with a fair amount of land, they got almost no pension (and this was decades ago). My parents looked at their own asset base (they also own a small farm and some fairly valuable land) and realised that they'd probably never see a pension.

As the kids left home (25 years ago for me), they started putting more and more money away. Dad finally entered full retirement at 72 and they're now quite comfortable. I suspect they could have retired earlier, but Dad didn't really know how to go about it and was moderately afraid of it.

Their financial plan was astoundingly simple. They simply saved money and they very rarely had any debt. Their house was built with cash in the 1980s when the farm had a few good years. They bought an IP in the early 1990s but sold it 6 years later without making any money on it. They borrowed money for the IP but paid it off within a few years. They looked at that property as a forced savings plan rather than an investment.

Another IP was purchased in 2002, they still have it and never owed a cent on it. I suspect this is their primary source of cash flow now, suplimented by their savings (which I believe are in the 7 figures). I suspect by the time they're both gone (at least one will likely live another 15-20 years), they'll still have some property assets but no cash left.

In my business I've encountered quite a few people from the same generation with a similar story. They didn't set out to actively invest, but they did pick up some property here and there. They also budgetted and saved religiously all their life. By retirement age they didn't get a pension, but they're doing far better than those who do rely on the pension.

Another generally common denominator was that most were self employed. Their businesses would meet the legal definition of 'small business'. They generated cash flow but these people aren't empire builders. At retirement they were able to sell their business for a nice cash injection.

I suppose you could say that they're not exactly investing in property or shares, rather they're investing in themselves and they didn't rely on anyone else (government or employer) for money, they made and saved it themselves.

 

And all the leg-ups; free education (for some), 50% CGT discounts, multiple government/policy backed "booms", properties in SMSF's, negative gearing, IO loans, low/no tax super income...the list could go on and on...

Then sit in a PPOR worth 1M+, with a 100k Landcruiser and a boat..all on full pension while waggling the finger at Gen Y...

 

Fingers crossed we will have the next IP within a month so no need for a back up plan

 

As a Gen Y'er I can't stand being lumped into the negative stereotype.

I knew a fellow who loved to bring up the lazy Gen Y stereotype all the time (including me). Then he would miss his credit card payment each month, get months behind in child support and complain when the rules were applied to him in any aspect of life.

 

Haha! That exact thing just happened to me

Of course I have a plan B and a plan C.

 

Gotta love the b ,c and d alternatives.. Helps with the SANF

Well done @Perthguy

 

My first backup is Super, which I will have as well as my property investments.
My second backup is shares which currently pay dividends.

I would like to add to this some EFTs and REITs etc, which I currently do not know anything about. If I wasn't allowed to invest in property again, this is the side of my portfolio I would work on.

 

Now that is what needs to be cracked down on!

There should be a limit set on PPOR values....after that they sell and use funds or do whatever but no pension!

 

Every generation will be labeled "entitled", "lazy" etc, by their predecessors.

 

Tyler, maybe the leg-ups weren't taken advantage of, and the other assets were bought on credit, but when push comes to shove, and when you suffer financially from what the Germans would call "Backpfeifengesicht" then maybe it's time to get back to basics and get a job in an Indonesian shoe factory for a while.

 

Exactly, back in my day I used to have to carry my horse to school and we went to the kitchen to meet women, not the bar. we didn't have hand-held calculators, we had to do addition on our fingers, to subtract, we had to have some fingers amputated. We didn't have water,we had to smash together our own hydrogen and oxygen atoms, we couldn't afford shoes, so we went barefoot. In winter, we had to wrap our feet with barbed wire for traction

We also didn't have warning labels as people weren't as stupid

(tongue firmly in cheek)

 

@Leo2413
good time to buy some LICs- ARG,AFIC and Vanguard ETFs...

 

work on being a nice person, just don't keep throwing people under the bus and it may work, bad karma very nasty, why are you doing this, seriously ? Focus on goals not personal petty jealousy


Marisa

 

Assets - Department of Human Services

 

Agree in principle, but keep in mind that something that simple wont always work as hoped... and will require expensive administration...

For example, what do you do to a pensioner couple from Sydney whose property valued at 800K last year and was comfortably under the asset test limit of $1 Million being suggested, and who have built a household budget and lifestyle budget around an expected fortnightly pension that they are eligible for, but who then suddenly see their property increase in value to $1.1 Million 12 months later because of a massive property boom?

What should the protocols be around who decides on the valuation amount? Should independent valuers be engaged by Centerlink to value all pensioner PPOR's annually? Should Centrelink rely on the NSW Valuer General ? I ask because even when we buy a resi property it's not uncommon to see variations in opinion of 15 - 20% between valuers at times... so who is to say whether the property is really worth 999K and exempt, or 1.1 Million , rendering them ineligible for any pension? These are the kinds of things that would need to be agreed upon...

Personally, I think a 3 yearly review of asset values is fairest, and 2 independent valuation reports should be done. if they both find the asset exceeds the $1 Million mark ( if thats the figure agreed upon) the pensioners would be allowed a 12 month exemption to sell up, and as long as the funds were used to purchase a less expensive dwelling, that new asset would remain exempt. Any leftover "profit" would be treated the same way cash/savings is treated now... and would likely reduce their pension a little.

For those who couldnt manage on the reduced amount, they could have a 2nd option, where Centrelink and the pensioners entering into some form of reverse mortgages /equity release agreement, whereby those whose assessable assets exceed the thresholds can continue to receive the full pension, but it must be repaid from the proceeds of a sale of a dwelling or from their estate when they pass away... easy enough for centrelink to caveat the security to protect their rights .

You have to be careful not to have people being cut off without the ability to pay basic bills and feed themselves. That's just cruel .

That being said... this situation where people can sit on multi million dollar properties and be exempt from asset testing, just isnt working how it was intended anymore, and it needs to be adjusted. 13 years working at Centrelink in the past, so I have some idea on the subject