Superannuation Discussion + market volatility

[RooFlyer]

I'm getting rather frustrated. Superannuation is a very complex topic; I learn useful things here by the informed comments of informed members given generously. However I think the thread is being spoiled by tangents of irrelevancies and repeated "oh, poor victim me" stories.

Personally, I'm bereft of interest in members complaining about their own woes and perceived victimhood both on and off the thread.

 

[tgh]

I am having altogether too much to say on this thread.. but..

The past in no way warrants the future.
We are living in a time where the snouts in the trough have rights.. and the incoming labour government will not deny them.

There is not enough money to pay the bills and the new government will have to get it from somewhere.
The current $3.2m cap may well be lowered or a supplementary tax of say 10% may be levied on all current super pensions (and perhaps also accumulation phase savings).

Pouring money into super has easily been the best option in historical terms ..but times they are a changing and the future may not be so rosy for anyone with money, hard earned or otherwise

 

[Pushka]

The billions of dollars in super funds is irresistible to Governments which as we know makes Super rules very liquid.

 

[Deleted member]

I thought most people on this forum shared the same allergy... .

I believe it may even be classified as a communicable disease (lol)

 

[Deleted member]

Did I say fully supported? They have savings. The savings are irrelevant. They worked hard and saved and helped 2 children along the way. Red rag to a bull? Sorry don't see it. Mum and dad couldn't work anymore so they retired. Centrelink advised and approved for my parents to be paid unemployment and then sickness benefit while they heard the case for disability which was eventually granted.

But instead of seeing this as a story of someone being able to survive on welfare payments it becomes an attack on ethics. The nastiness in some people shines through. Very sad.

Which was the way things were done back then.
So yes. I get it.

 

[cove]

With the super balances being about $1.5 trillion obviously there is a chance that a Treasurer might think $30 billion could come out of that source to balance a black hole deficit or two.
Most of us would like the superannuation area to not get touched for a decade but that is not going to happen.
The Government could direct some of the funds into nation building projects like water supply to arable land in the middle of Australia or fast trains between the most populated cities. The list could be massive.

 

[Pushka]

With the super balances being about $1.5 trillion obviously there is a chance that a Treasurer might think $30 billion could come out of that source to balance a black hole deficit or two.
Most of us would like the superannuation area to not get touched for a decade but that is not going to happen.

Well, I'd appreciate the pollies super being roughed up a little.

 

[amaroo]

Don't most Greek's retire around 50 Probably even younger back in the 80's 90's

Greek debt crisis: Greece takes axe to bloated pension system with retirement age hike to 67

 

[cove]

Worldwide there will be a pension crisis by 2040 so Australia needs to move the old age pension access to 70 or 72 within the next 5 years. To do this they then will be voted out of power.

 

[amaroo]

See post 146 ... it explains the job lot!

 

[amaroo]

Australia needs to move the old age pension access to 70 or 72 within the next 5 years.

Tough for office workers .... outright human rights crushing for anyone in the manual labour sector.

 

[cove]

Yes you would stop working and live on your savings until you are eligible for an old age pension.

 

[amaroo]

Yes you would stop working and live on your savings until you are eligible for an old age pension.

Should be a two tier system IMO .... just like it is now, only in reverse i.e. white collar>blue collar .... s/be blue collar>white collar

 

[rogerkambah]

Sorry JohnK, but I don't think you will be able to have a comfortable life, send your daughter to private school, go to Thailand twice year as a family and let the wife/daughter go an extra time at Christmas and still save money on $1000/ week in your hand. That is only $52K a year.

Only yesterday at post 128, QF WP included a link to the ASFA website which laid-out that $59K+ would be required for a couple to live a 'comfortable' life in retirement. A school age child will add thousands to your required cash p.a. Attending a private school will add more.

Only my opinion of course, however there seems to be some evidence to back it up. The $59K p.a. makes some assumptions on housing etc, but I don't know whether your situation will be affected either favourably or adversely.



I 'm glad my wife and I don't have to manage on $59K - we couldn't.

In my mind I have determined that $1,000/week in my hand is enough to have a comfortable life, send my daughter to private school, go to Thailand twice year as a family and let the wife/daughter go an extra time at Christmas and still save money.

That's the plan. Think I can achieve it.

 

[JohnK]

Ok JohnK. But your original post did rather come across as something perhaps you did not mean to say. I thought their issues were auto immune not work related. Did workcover/workers comp not assist them? - if work related they should have, esp the industrial deafness - employers pay enough in premiums. Negative? Maybe, just calling it as I read it.

The original post was meant to highlight that the retirement income needed is all relative but probably came out wrong. Dad got very little but got hearing aids paid for and mums hearing has only really worsened the past few years.

Sorry JohnK, but I don't think you will be able to have a comfortable life, send your daughter to private school, go to Thailand twice year as a family and let the wife/daughter go an extra time at Christmas and still save money on $1000/ week in your hand. That is only $52K a year.

Only yesterday at post 128, QF WP included a link to the ASFA website which laid-out that $59K+ would be required for a couple to live a 'comfortable' life in retirement. A school age child will add thousands to your required cash p.a. Attending a private school will add more.

Only my opinion of course, however there seems to be some evidence to back it up. The $59K p.a. makes some assumptions on housing etc, but I don't know whether your situation will be affected either favourably or adversely.



I 'm glad my wife and I don't have to manage on $59K - we couldn't.

That's only part of the equation.

I am already saving for my daughters school fees and hope to have those saved in the next 7 years. Have somewhere to live already but we may have even more retirement income if my brother and I divide our parents house in half and I live on one side and he lives on the other side. We may also live part of the year in Thailand which brings costs down. And of course there is the superannuation and how that performs.

Interesting challenge and I think stopping work early is worth the challenge.

 

[CaptJCool]

A really useful summary of the overall Super Industry

https://www.superannuation.asn.au/ArticleDocuments/269/SuperStats-Mar2017.pdf.aspx
the long term investment rates are showing that perpetual growth isn't sustainable. The further thru life the higher the balance that even if the absolute earning remains high the %earnings will likely be lower

SMSF
https://www.superguide.com.au/smsfs/smsfs-lead-the-super-pack-again

https://www.superguide.com.au/smsfs/typical-smsf-trustee-profile

on Nationalmap.gov.au you can check out the average and median superannuation balances by postcode. Some interesting insights from that where high wealthy suburbs have wealth other than in a super fund ! And 9% of people agree!

Account balances by age and gender
https://www.superannuation.asn.au/ArticleDocuments/359/ASFA_Super-account-balances_Dec2015.pdf.aspx

So from the first super stats, 70% on Govt pensions, and I note the ASFA standards are nearly met by couples age pension
heres the DHS stats (also note DSP HAS REDUCED significantly in recent years)



ALSO
I don't like the term 'retire'. It's 'making work optional', the earlier the better !
and with financial security (and yea shares are great for that. Tax-free or 9.5% or 19.5% taxed dividends with capital gains tax at half the rate of income tax. You might find this of interest Directors' Transactions (Insider Trades) - Market Index. Who's got skin in the game ?and a few selling outside blackout periods raking in millions!)

I prefer to call it stumps or finishing up as life goes on after Work. It's more like finishing a sports career and moving on!

 

[lovetravellingoz]

SUPER Planning for both the years leading up to retirement and in retirement:

Much of the discussion has been on the money., funds etc, but for couples, and for those with dependents, have your factored all their needs and abilities into your planning:


- What would happen if you died tomorrow, or before you retire or early in your retirement?
- What would happen if they died tomorrow?
- Does your spouse have the ability, desire, the knowledge and the tools to manage whatever the strategy is and investment are?
- Are there other investments that money/mortgages are owed on that are dependent on you working? Or would all that come crashing down. Is this factored into your life insurance?
- Have you factored in how long your spouse will live? If likely to be much longer than yourself have you accounted for this?
- Have you factored in what will happen if one or both of you become infirm and then require assisted care?
- If you have dependents, have you factored in all their expenses till they are independent (and some of course may never be)
- Bad things sometimes unexpectedly happen. Have you built in some financial buffer for this? Note that this is not just to you directly, but could be the economy tanking.
- What do they want to do in retirement?

I know in my case:
- My wife has no interest in financial matters and that Tax Time causes her great stress (and this despite her being professionally employed). So part of my strategy is to progressively simplify things in case I drop off this mortal coil unexpectedly. My 30 company strong share portfolio is great fun for me, but for my wife would be a nightmare.
- That while my two youngest are now at University age, that the huge cost of housing in Australia now is causing me some concern for them and so is one reason why I have decided to work longer than I was originally planning too at age 50 so that I can if required be in a better position to assist them while they establish themselves.

 

[sinophile888]

This thread has made me think about my superannuation position as I have recently decreased my workload.
I came across this site and am very pleased that the fund I have chosen remains in the top 10 performers.
Returns

 

[RB]

This thread has made me think about my superannuation position as I have recently decreased my workload.
I came across this site and am very pleased that the fund I have chosen remains in the top 10 performers.
Returns

I guess it is reassuring that your fund is there but he reality is that 3 yr return history doesn't reflect much? Also it is rare that a persons total holdings will be exactly the same as the quoted options. I guess they did at least state "Past performance is not a reliable indicator of future performance."

 

[QF WP]

So the reason for putting a lot of personal cash into super is the tax savings

That's only one of the important reasons to save for your retirement - but the one that is predominately viewed as the most important. There are plenty of other good reasons that I discuss with clients.

at any stage do the contributions become tax free - ie no tax whatsoever? Any other quals? Age >65 or retired and over 60?

Employer and tax deductible personal contributions (gross minus contributions tax) become taxable components when they hit the fund. By contrast, personal non-deductible contributions become non-taxable components (to anybody withdrawing in the future - whether by the fund member or their beneficiaries in the event of death of the member). Until now, the growth has been tax free in a "TtR" pension - until 1 July 2017, when the rules will change.

If retained in a "TtR" pension after 1 July, then the growth will become taxable at 15% (so there is no taxation difference to retaining it in a superannuation accumulation fund). If you then meet a "condition of release" AND retire before age 65, then you will be able to advise the Trustee and they will change it to a "retirement" pension. All "TtR' pensions will automatically become a "retirement" pension at age 65. Then all growth will be tax free.

Yes when you go "transition to retirement" the taxes cease unless you have way more than the $3.2 million a couple is allowed.
The tax rate on the larger balances will be 15% which is a bit better than 49% this year for the highest personal rate.

There are changes to the treatment of "TtR pensions" (in contrast to "retirement" pensions which have not been altered) from 1 July 2017. Removal of the tax exemption on earnings within the "TtR" pension is unlikely to deter people using these income streams (they will be taxed just like superannuation accumulation funds).

The 'income swap" strategy (using a TTR pension together with commensurate "salary sacrifice" contributions to the same amount of income - whether you factor in the 15% contributions tax or not) after 1 July 2017 will be less effective given the loss of the tax free status of earnings and the reduction in concessional contributions cap ($35K to $25K). So those people between preservation age and age 60 may not automatically create TtR's and may wait until age 60. I won't go further as there are many other variables to consider (personal situations).

For all of those fund members with in excess of $1.6M (whether in "TtR" mode or "retirement"), there are a number of strategies to obviate the additional tax payable after 1 July.