Superannuation Discussion + market volatility

[Pushka]

And as mentioned up thread. My mother’s living expenses in aged residential care were significantly higher than the 10 years prior to entry. Prior to entry she was living well off the pension and not digging into capital funds. Once she arrived into care all of her pension disappeared plus chunks of capital. She did not have the means to pay a bond. If she had then they can take all but $29,000? of your money which reduces ongoing expenses somewhat. Of course much of that money is eventually returned on death. She could have chosen to pay part bond and reduce the monthly charges but we chose to keep the money and pay higher ongoings rather than go through the extraction process after her passing. It’s a whole new financial world is Aged Care.

 

[cove]

Western Australia has much safer laws and rules for residential aged care accommodation than some other States in Australia. It was disgusting to hear and read what had happened at a group of eastern states properties where the operator seemed to view their residents as targets to get plundered. I won’t mention their name but they need to be ashamed of themselves. I hope the laws in your State are sufficient to cancel out unscrupulous aged care operators when they are reported.
We have set aside funds for my wife’s mum to enter care but she is still beating both of us in footy tipping and I think she knows the lost your marbles test off by heart as she has it annually. At 91 life gets trickier with health and that won’t improve.

 

[get me outta here]

The good news is that we are living 10 years longer. The bad news is that they have tagged it on the end.

... just look at the increase in female life expectancy since 1880 and then extrapolate the findings forward.
Updated life tables: Have our Australian life expectancies peaked?
Female children born in 2012 have a life expectancy of 84. Those aged 65 in 2012 had a life expectancy of 22 (so 87) and it continues to grow as they get older. Projected life expectancy is still slowly growing in most categories
.

 

[andye]

I have been doing a 'course' in Australian superannuation after successfully extricating my and Mrs andye's NHS pensions just before the UK government blocked it.

I was recently looking through various retirement income projectors and found this one:

Welcome - Retirement Income Simulator

It is by far the best I've seen, allowing for multiple variables of investment strategies, subsidiary income streams etc.

PS: even as someone regularly seeing people at extremes of age, I was surprised that the table suggests that (for a 48 year old man) there is an 80% chance of reaching 80 and a 50% chance of reaching 90

 

[lovetravellingoz]

PS: even as someone regularly seeing people at extremes of age, I was surprised that the table suggests that (for a 48 year old man) there is an 80% chance of reaching 80 and a 50% chance of reaching 90

Have a look at what ages your blood relatives have lived to as that will give you a better idea.

 

[Buzzard]

Have a look at what ages your blood relatives have lived to as that will give you a better idea.

Mine range from 50 to 84.

 

[andye]

No super required using father (non-familial brain tumour) , lots needed for mother's side.
My impression is family history is becoming less actuarily relevant with better treatment of ischaemic heart disease in advanced economies
The big change I've noticed is that for ordinary working men its no longer 50/50 that you make it to retirement. Tobacco controls are relevant for this too

 

[cove]

A survey I just read said Australians expect inflation to be 4.4% this year. If that actually happened pretty much everyone would have trouble making ends meet in twenty years time.
I think inflation of 2% per annum is what we should hope for over the next twenty years.

 

[Deleted member 29185]

Welcome - Retirement Income Simulator

Can anyway tell me if I can fool that simulator into something I can work with?

ie, I have some AU super, but no longer contributing to that. I have a pre-tax super contribution of 15% of gross salary which will be taxed at 2% on withdrawal with zero conditions (withdraw as cash if I like) but only earns about 2.5%/annum and it will (I'm believing) become just like personal savings rather than super when I bring it into AU.

When I try to increase either the employer contribution to 15% or salary sacrifice the difference, it brings up a warning that I breach the salary sacrifice allowances. I don't, as I'm under different laws.

Also, when you add your spouse, does that than indicate both of us? When I just put me in, it says I'll run out of cash at 88 (62% chance of still breathing), but when I add my +1 in, it says the cash will run out when I'm 105 and +1 at 103 (1% of still kicking). That sounds OK to me as I know my balance will be higher (but I also would like a higher disposable income than the one they auto select, which I assume they base on a % of current income??) but I'm not sure how I can add it in. I also didn't put any in for the sale of the family home (at downsize time).

 

[andye]

Can anyway tell me if I can fool that simulator into something I can work with?

ie, I have some AU super, but no longer contributing to that. I have a pre-tax super contribution of 15% of gross salary which will be taxed at 2% on withdrawal with zero conditions (withdraw as cash if I like) but only earns about 2.5%/annum and it will (I'm believing) become just like personal savings rather than super when I bring it into AU.

When I try to increase either the employer contribution to 15% or salary sacrifice the difference, it brings up a warning that I breach the salary sacrifice allowances. I don't, as I'm under different laws.

Also, when you add your spouse, does that than indicate both of us? When I just put me in, it says I'll run out of cash at 88 (62% chance of still breathing), but when I add my +1 in, it says the cash will run out when I'm 105 and +1 at 103 (1% of still kicking). That sounds OK to me as I know my balance will be higher (but I also would like a higher disposable income than the one they auto select, which I assume they base on a % of current income??) but I'm not sure how I can add it in. I also didn't put any in for the sale of the family home (at downsize time).

Not sure about the first part, but when you add in your spouse it calculates a combined pot.
You can slide the desired retirement income up and down
You can add in the expected amount for sale of family home as a one-off contribution in the Your Contributions section
Maybe you could try putting in your expected overseas pension pot in as a one-off contribution too

 

[Deleted member 29185]

You can add in the expected amount for sale of family home as a one-off contribution in the Your Contributions section
Maybe you could try putting in your expected overseas pension pot in as a one-off contribution too

No go for either. The one off contribution is a one off and only to AU$100000.

 

[andye]

No go for either. The one off contribution is a one off and only to AU$100000.

Sounds like you'd need to do some (?complicated) sums and add them into a retirrment income section.May be beyind this calculator though

I've been advised I can transfer my overseas pension (in one go) when i reach 55 (the age is to do with UK pension rules) and pay 15% of the growth from when I became tax-resident in Aus. I'm also led to believe that the growth will not be counted toward the lifetime contributions cap.

This is clearly a different set of circumstances to you but thus far I have been very glad I found country-specific advice

 

[QF WP]

This is a post that is a bit untoward, but I have to ask it.

There is a lot of advice in this thread, much (most, even) claiming "not advice" for which I understand the reasons, however this has me thinking about where one goes for "real" and "unbiased" and "knowledgeable" advice? Trust me, I have tried any times over the years to garner genuine advice and I've been more impressed with the "not advice" on this forum, than the so-called "fair dinkum" advice I've paid many dollars for via the so-called gurus.

To be honest, I've lost all faith in paid advice, so in the collective wisdom of the forum, where should I turn? As stated previously, I have AU super (not great), PNG Super (larger, but not wonderful), property investments, an AU company (winding back) and a PNG company (winding up), mid '50's with a huge amount of distrust in the investment industry as a whole. Where should I turn? Most of the conversations on here make less sense to me than Tok Pisin (and I'm far from fluent in Tok Pisin). Am I beyond redemption?

Most advice on this thread is given as general or factual advice. Where advice is given relying on at least one of your personal circumstances then it can be construed as personal advice. Trying to waive advice rights is something any reasonable lawyer loves.

You need somebody with proven cross jurisdiction knowledge (PNG and Aust). I presume that you are an Australian resident for tax purposes.

I would probably consider referring you to a financial planner who deals (only) with expatriates. He's also a member of AFF (but doesn't post a lot).

Yes. I am an Australian resident for tax purposes. I'm also a PNG resident for tax purposes.

Many thanks for the info. I must admit to not thinking I'm "unique". Surely many people have investments in two or more countries?

Searching for someone who "knows" is the problem. I agree that if I find someone who ticks the boxes, that would be just dandy. My problem is I'm not sure how (apart from phoning every Tom, Dick and Harry in the telephone book, and being armed with a bright light and thumb screws), I actually find these specialists without running the gauntlet of the "I know everything, about everything" brigade that peddle their wares from every street corner but in reality struggle with the concept of wiping their own bum without their Mum?? Is there a secret to identifying specialists in cross border investment advice?

You're unique in that you hold investments and cross reside in Australia and PNG. Whilst holding investments in multiple countries isn't unique, it's more common to be a tax resident of one and for the country where investments are held to be either the UK or US, primarily just due to statistics of expats.

I'd suggest the easiest first step is finding a CFP, as you know at least they will have come across this in their studies. If they haven't provided specific advice in this area, they've at least passed a rather stringent course on the subject (albeit mixed with some other content, most of which would likely be relevant anyway). The high level strategies typically won't change depending on the location of your investments, but more so the tax treatment and thus the available strategies to deploy.

Here's the link - Find a financial planner - The Financial Planning Association of Australia

I see there's about 60 within a 10km radius of Broadbeach.

From there you can quickly spot the ones with obvious alignment to a potential source of a conflict i.e. a bank. If you have a look around and find a few you like the look of from website, bios etc. you can then e-mail or call to confirm if they are self licensed or not and ask if they've dealt with situations similar to yours / would be comfortable dealing with that scope of advice. Meet with a couple and see who you gel with and instils the most confidence in you.

Full disclosure, I am a financial adviser at a self licensed firm, who is nearing the completion of my own CFP studies and my practice has a satellite office on the Gold Coast. I did however check and neither myself or my colleagues show up in the search referenced.

I'm obviously bias towards advice from self licensed advisers with post-graduate qualifications based on my own beliefs of what financial advice is. I'm sure some disagree with me (though imagine a majority would agree), so please take what I say with a pinch of salt, given my standing in the industry.

I know one adviser whose office is on the Gold Coast, is actually an AFF'er and is a specialist in expatriate advice (and to whom I have referred clients with expatriate advice requirements). He's the MD and say I sent you (PS. I get no benefit for referring)

Australian Expat Financial Advice | Atlas Wealth Management

 

[QF WP]

Can anyway tell me if I can fool that simulator into something I can work with?

ie, I have some AU super, but no longer contributing to that. I have a pre-tax super contribution of 15% of gross salary which will be taxed at 2% on withdrawal with zero conditions (withdraw as cash if I like) but only earns about 2.5%/annum and it will (I'm believing) become just like personal savings rather than super when I bring it into AU.

When I try to increase either the employer contribution to 15% or salary sacrifice the difference, it brings up a warning that I breach the salary sacrifice allowances. I don't, as I'm under different laws.

Also, when you add your spouse, does that than indicate both of us? When I just put me in, it says I'll run out of cash at 88 (62% chance of still breathing), but when I add my +1 in, it says the cash will run out when I'm 105 and +1 at 103 (1% of still kicking). That sounds OK to me as I know my balance will be higher (but I also would like a higher disposable income than the one they auto select, which I assume they base on a % of current income??) but I'm not sure how I can add it in. I also didn't put any in for the sale of the family home (at downsize time).

Not sure about the first part, but when you add in your spouse it calculates a combined pot.
You can slide the desired retirement income up and down
You can add in the expected amount for sale of family home as a one-off contribution in the Your Contributions section
Maybe you could try putting in your expected overseas pension pot in as a one-off contribution too

No go for either. The one off contribution is a one off and only to AU$100000.

These calculators fit the requirements of ~90% of the population, but your situation is 0.05%. Fooling it may not be possible. Even the $100K/$300K over 3 years (triggered bring forward) sounds like it doesn't work. Calculator may need some work....

 

[QF WP]

I think this is a good discussion point. How do you? We can plan for necessary living expenses based on what we know, however health care is something we don't know until it happens. I know in both of my grandmothers cases, the sale of their home and their pensions paid for ongoing aged care and Medicare and perhaps health insurance (?) paid for their health care. One passed away in a retirement village and one in a nursing home. My own father passed away suddenly with only death expenses and my mother now lives in a retirement village (which she loves), which was paid for by the sale of her home and is one of those places one buys into, but is told not to expect anything on the sale of the property at the other end. I'm not quite sure how that works, but what it does mean is that she is enjoying a great lifestyle now and is actually cheaper in outgoings than her own home was. I have no idea what happens if she ends up needing more health orientated aged care into the future (eg. a nursing home).

One of the problems with aged care and super for that matter, is that the goal posts seem to continually move. How does one plan with any certainty, or is the concept mainly to stash a great wad of cash and hope it lasts?

Nothing quite like Aged Care advice - the contracts for retirement villages are a nightmare. More like a right to reside in some cases, with huge retention amounts. Good to see that with high profile cases like Aveo in the spotlight, this disruption to their profligacy will benefit some (probably not the ones who are already in contracts that may not be easily re-cast). Retirement Resorts with individual ownership of properties is on the rise.

 

[Deleted member 29185]

I know one adviser whose office is on the Gold Coast, is actually an AFF'er and is a specialist in expatriate advice (and to whom I have referred clients with expatriate advice requirements). He's the MD and say I sent you (PS. I get no benefit for referring)

Australian Expat Financial Advice | Atlas Wealth Management

Thanks for the tip. Contact made, now I'll see what magic (or at least sound advice) he can offer!

 

[JohnK]

Apologies for the silly questions firing on all cylinders.

If I pay $15,000 post tax money into my superannuation in May do I get the same tax deduction as if it was salary sacrificed?

Reducing taxable income by $15,000 and paying only 15% contribution tax is the desired result. Shouldn't take me over the $25,000 limit and if it does can reduce the deposit.

 

[QF WP]

Apologies for the silly questions firing on all cylinders.

If I pay $15,000 post tax money into my superannuation in May do I get the same tax deduction as if it was salary sacrificed?

Yes, the rules for personal contributions being tax deductible were commenced 1 July 2017. You get it as a tax deduction, like an employer would for Superannuation Guarantee or Salary Sacrifice - both have the same effect of diminishing the entity's taxable income on which MTR (marginal tax rate) or company tax is paid.

Reducing taxable income by $15,000 and paying only 15% contribution tax is the desired result. Shouldn't take me over the $25,000 limit and if it does can reduce the deposit.

You've already paid MTR on the net amount paid to you (which you are now contributing to super). Reducing your taxable income by the deductible contribution could change your MTR (if it brings you below one of the income tiers - Individual income tax rates). So cannot tell you beforehand what is going to be the net effect unless all information is known.

 

[JohnK]

You've already paid MTR on the net amount paid to you (which you are now contributing to super). Reducing your taxable income by the deductible contribution could change your MTR (if it brings you below one of the income tiers - Individual income tax rates). So cannot tell you beforehand what is going to be the net effect unless all information is known.

Thanks. I'll have a chat to the accountant next month.

With rental income I'm well into the 37c tax bracket. So for the life of me cannot think how much tax I'd save paying with $15,000 post tax dollars.

The calculation with salary sacrifice is much easier? Saving = $15,000 * (37% - 15%) = $3,300?

 

[Chalkie]

If I plan on retiring at 60 then need to have a target for 16 years of spending until 76 years of age. Not sure I'd be able to travel much or play golf past that age.

Don't sell yourself short. My 95 year old grandfather still plays 18 holes, twice a week, off a handicap of 22. He's done that since he retired in 1980 (27 years ago) (the handicap has crept up a bit over the years).