Superannuation Discussion + market volatility

[CaptJCool]

And this is why we have a level of older people who may be asset 'rich' but are struggling with the cost of of living as they get no relief from the Govt unless on the aged pension. And they did not get the full employment cycle of SG payments until well into their career.

Yup
The age pension figures have flatlined - helped that it’s now 67 for all genders (historically was 60 for women and 65 for men)

They are published every 3 months which I update on here

The current take up rate is around 1 in 3 which just about cover the exits. The group turning 67 today were 35 in 1992 when super became compulsory for all. 32 years of contributing is getting close to a “full lifetime” contribution

There are two reasons for exit
Death
Ineligibility as a surviving spouse
Where the asset threshold is lower and you now have inherited the other half of the assets !
Only about 1 in 2 over 90 yo are on age pension

And then we got the aged care “home” sell the house to pay the RAD saga. So The historical problem of asset rich income poor is forced to be addressed at that point

If a couple hold superannuation and or property they will likely never be on age pension. And after all, wasn’t that the point?

 

[andye]

No age pension for me. Well not unless I reach 80 years old.

I'm not clear why not eligible until 80. Potentially none of my business but can you share why.
Seems to me if you are withdrawing 10% p.a you'd be below asset threshold before then (though seem to remember you might have an investment property)

 

[JohnK]

I'm not clear why not eligible until 80. Potentially none of my business but can you share why.
Seems to me if you are withdrawing 10% p.a you'd be below asset threshold before then (though seem to remember you might have an investment property)

Investment properties. I've wasted a lot this lifetime but managed to hang on to some investments.

I have not decided yet how long I will work. Maybe 65, maybe 67, maybe 70 if work allows me to continue working 2-3 days a week. I don't have huge super balance but more than enough for our needs and super balance is growing all the time.

We don't know when it's time to end our time in this simulation but I don't want to have any super left in super/pension account if I reach 80 years old.

 

[andye]

Investment properties. I've wasted a lot this lifetime but managed to hang on to some investments.

I have not decided yet how long I will work. Maybe 65, maybe 67, maybe 70 if work allows me to continue working 2-3 days a week. I don't have huge super balance but more than enough for our needs and super balance is growing all the time.

We don't know when it's time to end our time in this simulation but I don't want to have any super left in super/pension account if I reach 80 years old.

That makes sense
Hopefully can supplement your income from those investments
One consideration if you are struggling to do all you want between now and 80, is selling one and putting some more into your super but I guess you've weighed things up and are looking to MissK's future

 

[Buzzard]

I spend a lot on prescriptions each month. Around $100. That will cut back to $25 I think. But dealing with Centrelink is exhausting.

I'm pretty sure the maximum you pay for a PBS medication is $7.70

By memory it took me almost 2 months for my HCC to be approved. On the opposite side of the scale +1 had hers approved within days. 2 things helped, she had previously attended a Centrelink office to sort her wayward account out thus providing photo ID and as part of her application, the supporting ATO tax return showed zero income.

 

[Pushka]

I'm not clear why not eligible until 80. Potentially none of my business but can you share why.
Seems to me if you are withdrawing 10% p.a you'd be below asset threshold before then (though seem to remember you might have an investment property)

Maybe by then he will have spent all his super?

Post automatically merged: Jul 21, 2024

I'm pretty sure the maximum you pay for a PBS medication is $7.70

By memory it took me almost 2 months for my HCC to be approved. On the opposite side of the scale +1 had hers approved within days. 2 things helped, she had previously attended a Centrelink office to sort her wayward account out thus providing photo ID and as part of her application, the supporting ATO tax return showed zero income.

I take five?

 

[serfty]

You cannot salary sacrifice as much as you want into super. The limit this FY is $30k (2023-4 it was $27.5k).

Such top ups can be backdated for the previous 4 and current years. To 2022-23 it was $132,500 less contributions that have been made in that 5 financial year period.

Concessional contributions cap | Australian Taxation Office

Keep track of your concessional (before-tax) contributions so you don't exceed the contributions cap.

www.ato.gov.au

 

[kpc]

I actually want and have sufficient funds to retire now....but +1 wants me to keep working.

I want to avoid touching my Super til 65 yo which if you believe the Super's predictions, it should be close to double by then

All my income for next 8 years will be "extra" and will fund more lavish and frequent trips

 

[CaptJCool]

I actually want and have sufficient funds to retire now....but +1 wants me to keep working.

I want to avoid touching my Super til 65 yo which if you believe the Super's predictions, it should be close to double by then

All my income for next 8 years will be "extra" and will fund more lavish and frequent trips

One needs to balance
Current and future

And the potential pay-Orf of working longer or setting sail into the sunset with the superannuation

Too often we don’t understand enough about the future to make a guess at our financial (and dependants, including grand children) needs and wants

Given my parents in their late 80s and now in aged care there’s a packet just on that to pay for the weekly charges (ugh)
Fortunately the accommodation charges are much lower (helped to have a mortgage on the property)

I had another friend (multi-millionaire) who was contributing over $2,000 per week (that until the lite time caps are reached) but pretty ugly on cashflow that’s for sure until passing away)

That said we are older and sicker as we get it that phase and the average stay is 2.5 years….

Post the early 1990s - the wheels fell off BT. Believing your own PR is always fatal, equally the team size went from 27 (IIRC) on the Investment side (including 2 marketing) to over 50 (5+ marketing) by the mid 1990s.

Love me the BT from 1989-92 I scored 21-24% annual earnings !
Helped with the deposit for the first apartment.

But yes
They all seemed to believe their own BS and those rates were never long term likely

The other things that happened

Life insurance policy volumes crashed
Union membership rates crashed

Why ?
The uptake of women in the workforce

Why?
Because when it was one income families one needed job security (which a union membership offered) and income security (which a life insurance policy offered)

But when asecond family income showed up AND both with compulsory superannuation (which included its own life insurance arrangements) both were ditched at rather rapid rates … IMHO

In my own situation

54/11

The gift that began around 1986-87 when the superfunds lost their tax exemptions and obligations to invest heavily in government bonds.
The ALP opened the door to investments of all kinds including shares - and in the first year Comsuper invested it made a return on shares of

56%

Overall, similar annual returns in that period to BT which eventually settled into the range of 6-8% per annum…

This inflated the bucket of cash and thus was born the 54/11 best deal ever (just around 100,000 of us lucky ducks!)

 

[JohnK]

One consideration if you are struggling to do all you want between now and 80, is selling one and putting some more into your super but I guess you've weighed things up and are looking to MissK's future

I don't need to do much between now and 80 years old.

Three times a year to Thailand. February, June and October. 2 weeks golf, 2 weeks relaxing in my house in Chiang Mai.

Little one is going to be fine. I need to live long enough to make sure no one can take advantage of her.

 

[Brissy1]

Such top ups can be backdated for the previous 4 and current year. To 2022-23 it was $132,500 less conrintubitions that have been made in that period.

Concessional contributions cap | Australian Taxation Office

Keep track of your concessional (before-tax) contributions so you don't exceed the contributions cap.

www.ato.gov.au

Mentioned in your link, but to be clear such top ups iff...

• a total super balance of less than $500,000 at 30 June of the previous financial year

 

[Happy Dude]

Interesting and perhaps helpful information for those wondering how much they'll need in retirement.

https://www.superannuation.asn.au/wp-content/uploads/2024/05/2405-ASFA_Retirement_Standard_Budgets_March-24_quarter.pdf

 

[kpc]

Interesting and perhaps helpful information for those wondering how much they'll need in retirement.

https://www.superannuation.asn.au/wp-content/uploads/2024/05/2405-ASFA_Retirement_Standard_Budgets_March-24_quarter.pdf

I'll need a lot more.

 

[Askance]

Interesting and perhaps helpful information for those wondering how much they'll need in retirement.

https://www.superannuation.asn.au/wp-content/uploads/2024/05/2405-ASFA_Retirement_Standard_Budgets_March-24_quarter.pdf

20 dollars a week on alcohol for a single, comfortable 65-84? Lol, think of the qantas points

 

[SydneySwan]

These calculators are hopeless. ‘Modest’ or ‘comfortable’ just doesn’t cut it. AFFers need the ‘extravagant’ calculator that factors in business class airfares and 5 star hotels.

 

[kpc]

These calculators are hopeless. ‘Modest’ or ‘comfortable’ just doesn’t cut it. AFFers need the ‘extravagant’ calculator that factors in business class airfares and 5 star hotels.

A mate told me I need 200K a year in retirement to fund my lifestyle.

 

[MARTINE]

A mate told me I need 200K a year in retirement to fund my lifestyle.

At least!

 

[Buzzard]

Maybe by then he will have spent all his super?

Post automatically merged: Jul 21, 2024

I take five?

The cost I mentioned is per PBS medication.

 

[Pushka]

The cost I mentioned is per PBS medication.

Two of mine are the $32? ones so a good savings.

 

[RAM]

Love me the BT from 1989-92 I scored 21-24% annual earnings !
Helped with the deposit for the first apartment.

But yes
They all seemed to believe their own BS and those rates were never long term likely

I suspect you are talking about the returns from a couple of the Equity funds (Retail) run by Kerr such as the Asia Pacific fund which did well, US fund not so much.

Despite in 1989 where one recent graduate was tasked with doing a major research project into Australian property (all mainland CBDs) to create a database of every office building (something that no Commercial Real Estate company had - believe it or not!) - his analysis forecast the property crash including literally to within 1% of the peak vacancy rate for every CBD in the impending crash - the top people refused to discount the selling price of the direct property (mostly from own-development) holdings by even 2 to 3% to latest valuation. We owned properties such as Hunter Connection & Tower, The Menzies, Centennial Plaza (over from Central), Maritime Plaza (do a search & see the AFR story from Oct 87) etc etc.

The was in spite of earning 16%+ (4% per quarter) on cash through 1989. This was a major cause of BT's subsequent underperformance in BTAR, the individually managed company funds & the retail super products.

The returns on the main super fund - BTAR were nothing like 20+% over your period unfortunately.

So poor in fact that the new Wholesale Pooled Super fund I launched in March 1987 & managed its Asset Allocation on my own as 'you will never beat the Asset Allocation team' - so none of the senior people wanted a part of it, the BT Capital Stable fund - outperformed it despite being run just as its name said.

By mid 1990 just about every one of the Top 20 Industry funds (as existed then such as ARF which became AustSuper) were putting money into it instead of the various Life Company Capital Guaranteed funds (with up to 5 year delays to receive redeemed funds in those days). Post departure not so much.

Still the marketing gurus kept October 87's success front of mind in the marketplace together with Kerr's efforts for the various Select Markets Equity trusts (until he left a couple of years later) the Japan fund excepted.