Superannuation Discussion + market volatility

[cove]

I still remember my wife’s face when our bank released our home title deeds. That was a long time ago.
Everyone has different views on retirement funding and there is no correct answer nor wrong answer.

 

[JohnK]

Superannuation is meant for assisting retirement but we have many who need it to pay off a mortgage, get a 4WD with a big caravan for the next part of their non working life.
Meanwhile the Federal Government wants us to pay a lot more towards our aged care if we can.

I have a lot of debt that I struggle to manage. I pretty much live from pay to pay with nothing in between.

I'm trying save more superannuation so that I can pay my debt when I retire. Is that wrong?

I'm also hoping to be able to travel to Thailand living off my superannuation. Is that wrong?

By the way I'm not expecting, nor do I want a pension of any sort. I've been paying lots of Medicare in my working life. I also have private health insurance. And the government wants me to fund my health care in retirement when I need it most? Seriously?

I'm not an expert but here's the first thing we need. A government than knows how to govern for the people.

<redacted>

 

[CaptJCool]

Nor do I at all but the Feds must look at all the super funds lying around and somehow they want to play with it. Or at least stop us from playing with it.

not sure on that

Keeping super locked up was the point of relieving the pressure on Age pension costs IMHO - otherwise super would be spent...
in any event, the Feds score at least 15% tax on some contributions & all earnings in accumulation phase.

its fair to suggest there's been a lot of nipping and tucking over the years eg limits on various contributions, extra tax if income higher than $250,000, transfer balance caps, and the proposed $3 million tax-free limit - each nip and tuck taken collectively adds to the tax take - that said, super funds tax in this financial year is under $10 billion.

Major superannuation and retirement income changes in Australia: a chronology

Updated 11 March 2014 PDF version [743KB] Kai Swoboda Economics Contents Introduction Policy and legislative chronology Whitlam Government (December 1972–November 1975) Fraser Government (November 1975–March 1983) Hawke Government (March 1983&ndash

www.aph.gov.au

it wasn't until 1992 that the universal super happened although there had been a lengthy period where super was offered in the private sector

the age 65 is more to do what was once compulsory retirement age as well as the start of age pension for men (women being 60 from 1910-95 increasing to 65 by 2004)

 

[cove]

Going into care and having to pay a RAD deposit was not considered by many. Today those RAD deposits can be quite large.
I believe there is about 3.5 trillion dollars in Australian superannuation and women who have had families tend to have the least in their accounts.

 

[cove]

We are now getting much closer to retirement as we cannot stop the clock from ticking.
Our endless supply of frequent flyer points will slow right down.
i don’t think that we need any additional credit cards and getting to pull 5% out of our super fund isn’t a biggie.
We have wills, advanced health directives, enduring power of attorney and enduring power of guardianship.
Anything else we should consider?

 

[MARTINE]

We are now getting much closer to retirement as we cannot stop the clock from ticking.
Our endless supply of frequent flyer points will slow right down.
i don’t think that we need any additional credit cards and getting to pull 5% out of our super fund isn’t a biggie.
We have wills, advanced health directives, enduring power of attorney and enduring power of guardianship.
Anything else we should consider?

Enjoy

 

[cove]

Good thinking @MARTINE. We have been working for more than 5 decades so retirement isn’t really something that I have spent much time thinking about. I have enjoyed working.

 

[MARTINE]

Good thinking @MARTINE. We have been working for more than 5 decades so retirement isn’t really something that I have spent much time thinking about. I have enjoyed working.

Exactly
Once you have enough $$$ the best thing that it can buy is time which is yours to do as you please. Experiences with family and friends last a lifetime and are priceless memories
Sadly having $$$ does not guarantee good health and - having lost too many family many too young - I am forever grateful and never take life for granted.
Its wise to have all the estate admin in hand (so many don't).
I also like the comment that at this stage of my life giving $ to my family is via a warm hand - not a cold one - as that can make a difference to them.
Too maudlin? I hope not
I think the word retirement should be placed with sabbatical - new life experiences and learning

 

[drron]

I retired from my full time job at the age of 60. And for the next 15 years practiced for my real retirement which finally occurred just over 15 years later. Has been a simple and enjoyable changeover.

 

[serfty]

Their super balance is an order of magnitude higher than the debt.

When I suggested using part of that balance to eliminate the $12k in annual costs, they looked at me like I had two heads and did not believe they could do that in a couple of months at no charge.

Too close this off, they did not muck around and researched this early last week.

On Friday they paid the overdraft out!

Being over 60 but not yet 65, there was slightly more to do get the release but nothing difficult (seems a rubber stamp job).

Their consideration of superannuation was that it was sacrosanct; not to be touched until retirement. For them it generally still is as they swear they are going to put the ~1K saved each month back into their Superannuation as personal contributions. Seems those payments may be tax deductible as well.

 

[CaptJCool]

We are now getting much closer to retirement as we cannot stop the clock from ticking.
Our endless supply of frequent flyer points will slow right down.
i don’t think that we need any additional credit cards and getting to pull 5% out of our super fund isn’t a biggie.
We have wills, advanced health directives, enduring power of attorney and enduring power of guardianship.
Anything else we should consider?

we just finish up things we used to do = we never retire from life
and we are going through this with my parentals now

the usual caveats here on this is not financial advice, its my view of lived experience with those in their 80s

binding nominees for Superannuation - they do expire so make sure they are kept upto date
Transfer balance caps - now $1.9 million per person
the Govt announced $3 million and above 30% tax on earnings is easily circumvented by moving stuff out of super and utilising the SAPTO etc to effectively receive about $300,000 per couple tax-free

Sign up to myaged care even if you don't have services, and sort out your reps there too - family members or friends can be nominated by yourselves to have access to the portal

YOU DO NOT NEED TO SELL THE FAMILY HOME
work out how your finances affect your aged care payments Fee estimator: How much will I pay?
think about gifting assets/$ with a warm hand as if you are in the mid-range of assets, your daily fees (subject to life time caps) are pricey and will likely exhaust most your non-housing assets, Aged care home costs and fees see the example of Mariam - even with $400.000 of assets the daily fee is $214 per day, that's $1500 per week (plus any additional services) yikes that's heavy $78,000 per annum (subject to annual and lifetime caps) remembering most those over 60 pay no income tax and medicare is "relatively free" and around 8% only make it into a aged care home - in Mariam's case she may well need to "sell the house" to stop the cray cray daily billing!

if you are a multi-millionaire, it seems to be significantly less so

Home Care Package fee scenarios for people entering care from 1 July 2014 this can be heavy on even the couple only earning $1500 per week - did a rough calc that per couple you could be funding well over $400 per week (perish the thought if you still got a mortgage)

Legal Incapacity - substitute decision-makers - do they know the Emergency plan? WHY do you call 000? for people with memory loss, how will they know what to do?

stick the medical history on the fridge A Community Service Project - by Rotary, Lions Club & your Ambulance Service in this way the Ambos know your wishes because they turn up to SAVE LIVES - your advanced care directive needs to be specific as to resuscitation otherwise they will use oxygen bottles and ventilators etc to keep you alive

fall detection devices
you can buy these outside the home care packages but package approval has specific suppliers only so at the very least ought be used to pay for the locked box at the front door so Ambos can access the premises

 

[CaptJCool]

Too close this off, they did not muck around and researched this early last week.

On Friday they paid the overdraft out!

Being over 60 but not 65, there was slightly more to do get the release but not much (seems a rubber stamp job).

Their consideration of superannuation was that it was sacrosanct; not to be touched until retirement. Foer them it generally still is as they swear they are going to put the ~1K saved each month back into their Superannuation as personal contributions. Seems those payments may be tax deductible as well.

Glad you could point them in the "right" direction!

in more recent times I discovered, there's many more unaware they can use super to pay off accumulated debts as long as they meet the conditions of release - as well a number of recent stories where inheritances have been used to do the same.

I would rather people use super to finish paying off the home loan - either way it exhausts the cash available for ongoing spending on y'know things like first class airfares (unless you're willing to reverse mortgage)

 

[Pushka]

At the whiff of legislation to quarantine part of our super for aged care and it’s all coming out.

 

[CaptJCool]

well, if its a choice of a long retirement income tax free superannuation instead of paying ANY INCOME TAX

and being one of the 8% of australians who end life in a aged care home (yes, its only 160,000 people in them)

AND needing to burn $200 a week as your personal contributions to the Home Care package

or


paying income tax every year after not working and getting FREE aged care and home care packages

I'll take the first option

 

[CaptJCool]

The draft funding principles are here

https://www.pmc.gov.au/resources/aged-care-taskforce-communique-25-july-2023

Principle 3 – Government is and will continue to be the major funder of aged care. Government funding should be focused on care costs.

Personal contributions should be focused on accommodation and everyday living costs with a sufficient safety net.


Current arrangements are inequitable for the middle class. Overcharged and under-delivered


From Friday todays Australian

 

[get me outta here]

Asking for a relo who apparently paid into over whatever was required to his PSS account. Now he says he'd like his voluntary contribs back and not in the form of his current meagre pension. Anyone know if that's allowed?

 

[SYD]

Asking for a relo who apparently paid into over whatever was required to his PSS account. Now he says he'd like his voluntary contribs back and not in the form of his current meagre pension. Anyone know if that's allowed?

How old is he? If under preservation age - probably limited chances.

 

[get me outta here]

How old is he? If under preservation age - probably limited chances.

He is well over preservation age, and has been taking pension for years. Perhaps that precludes him?

 

[SYD]

He is well over preservation age, and has been taking pension for years. Perhaps that precludes him?

It probably would if he’s converted everything to a pension already? Assuming it was a defined benefits scheme or hybrid super?

Unless he has member contributions seperate - then they should be available as a lump sum or rollover to another super fund?

Probably best to contact PSS - there might be provisions for turning off the pension (eg returning to work). I learnt the other day that with regular super you can do that. Create a pension fund but have the ability to return funds to accumulation fund if returning to work etc. or something along those lines - again best to seek expert advice.

 

[get me outta here]

It probably would if he’s converted everything to a pension already? Assuming it was a defined benefits scheme or hybrid super?

Unless he has member contributions seperate - then they should be available as a lump sum or rollover to another super fund?

Probably best to contact PSS - there might be provisions for turning off the pension (eg returning to work). I learnt the other day that with regular super you can do that. Create a pension fund but have the ability to return funds to accumulation fund if returning to work etc. or something along those lines - again best to seek expert advice.

Thank you for the info and suggestions @SYD, I'll let him know.