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Post by Peter on Aug 25, 2021 12:37:18 GMT 8
I’ve never really shown much interest, but given I was bored I started to look into it.
forget investment properties and shares but looking at JUST SUPER that you pay as part of your job there is a display on mine that says,
retirement benefits based on your current balance and some assumptions we estimate in 20xx you will have $$$$ which is xxx% of the amount needed to retire comfortably.
I was surprise the percentage was so high for me. It seems you can do better than 100%.
what is generally considered comfortable to retire on as far as a super funds are concerned?
500k. 800k. 1 million. ??
remember this JUST SUPER. Not personal investments etc….
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Post by DropBear on Aug 25, 2021 13:26:27 GMT 8
I’ve never really shown much interest, but given I was bored I started to look into it. forget investment properties and shares but looking at JUST SUPER that you pay as part of your job there is a display on mine that says, retirement benefits based on your current balance and some assumptions we estimate in 20xx you will have $$$$ which is xxx% of the amount needed to retire comfortably. I was surprise the percentage was so high for me. It seems you can do better than 100%. what is generally considered comfortable to retire on as far as a super funds are concerned? 500k. 800k. 1 million. ?? remember this JUST SUPER. Not personal investments etc…. From memory the number for "comfortable retirement" generally used by Government and the superannuation industry is something less $55K/PA for an individual and less than $65K/PA for a couple that own their own home. (add more if you rent). Which effectively equates to $550K super for an individual and $650K for a couple. Personally, I think these numbers are underestimated BS. In my opinion (and your circumstances will be different so this may not be applicable to your situation) - Superannuation alone (even at 12%) will not provide a "comfortable" lifestyle in retirement.
- With an increasingly aging population, Government pension may not the the safety net it used to be.
- The asset test will get more and more stringent so we made our plans assuming that the pension doesn't exist
- An alternative income stream will be a necessity.
- A diversity of investments will be a necessity. (Super/Shares/Property/Term deposits)
Me and KoalaBear (based on a planned retirement date for me of sometime in 2033) are working towards investments around $1.0m-$1.2+m (excluding the family home) to fund our retirement. We think this will be excessive but it means that if one of our investments goes pear shaped between now and then, we'll still be OK.
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Post by Peter on Aug 25, 2021 14:12:15 GMT 8
Tracking about the same. But have a couple of investments outside super as well.
I”m still not planning on retiring early however. Lucky as nearly all my mates are younger than me. Except 1.
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DaveT
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Post by DaveT on Aug 25, 2021 15:48:33 GMT 8
One good way to estimate how much you need in Super is to add up your current total expenditure for the year. All the credit cards (assuming people pay for pretty much everything by CC: groceries,petrol,clothes,etc),Rates,gas,electricity, holidays(😀😀, remember them). Your total annual spend ( exclude kid's expenditure) Multiply that number by 20. Based on the government's current minimum drawdown of 5% from age 65, that figure should be expected to last about 20-25 years. You might be able to afford an international holiday every 5 years or so, and a new car every 10. People might be surprised the total $$$ they spend. It doesn't take too long for a couple whose kids have left home to still rack up $70k. That's $1.4 mill. in TODAY'S money.
Those "underestimated " figures that Dropbear has quoted ( <$65kPA= $650k in Super) may be based on the current performance of a good Super fund.....20%!!!! Long term average is closer to 8-10%. God only knows what changes will be made to Superannuation law and the Old Age Pension ( by any Federal government of either persuasion) in the next 10 years.
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dalai
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Post by dalai on Aug 25, 2021 15:58:49 GMT 8
I am the opposite and not worrying about it. My dad died of a heart attack at 49, wife cancer at 52 so good chance I won't get that far!
Not adding extra to Super to be locked away till retirement. Plus who knows what changes governments will implement with super legislation between now and then...
Worst case would be I sell my house which I already own outright and move further out; as long as space for my cars as I won't be selling those!
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Post by DropBear on Aug 25, 2021 16:21:57 GMT 8
One good way to estimate how much you need in Super is to add up your current total expenditure for the year. All the credit cards (assuming people pay for pretty much everything by CC: groceries,petrol,clothes,etc),Rates,gas,electricity, holidays(😀😀, remember them). Your total annual spend ( exclude kid's expenditure) Multiply that number by 20. Based on the government's current minimum drawdown of 5% from age 65, that figure should be expected to last about 20-25 years. You might be able to afford an international holiday every 5 years or so, and a new car every 10. People might be surprised the total $$$ they spend. It doesn't take too long for a couple whose kids have left home to still rack up $70k. That's $1.4 mill. in TODAY'S money. Those "underestimated " figures that Dropbear has quoted ( <$65kPA= $650k in Super) may be based on the current performance of a good Super fund.....20%!!!! Long term average is closer to 8-10%. God only knows what changes will be made to Superannuation law and the Old Age Pension ( by any Federal government of either persuasion) in the next 10 years. Nice post without all the financial fluff. The last sentence is actually very important and one of the reasons why Koala Bear and I have our financial future in multiple asset streams ... some we have full control over (e.g. property/shares/savings ) and some we don't (e.g. superannuation ). BTW the yearly numbers were in my head but I did cross check them against a superannuation site (can't remember which one). The way they make it work is to include the govt pension in the final income stream (which I'm assuming I won't have access to because I'll most likely exceed the asset limits which will undoubtedly get tighter over the next decade) If you want to see how good or bad things might be have a look at moneysmart.gov.au/retirement-income/retirement-planner
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Deleted
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Post by Deleted on Aug 26, 2021 6:37:46 GMT 8
I’ve never really shown much interest, but given I was bored I started to look into it. forget investment properties and shares but looking at JUST SUPER that you pay as part of your job there is a display on mine that says, retirement benefits based on your current balance and some assumptions we estimate in 20xx you will have $$$$ which is xxx% of the amount needed to retire comfortably. I was surprise the percentage was so high for me. It seems you can do better than 100%. what is generally considered comfortable to retire on as far as a super funds are concerned? 500k. 800k. 1 million. ?? remember this JUST SUPER. Not personal investments etc…. If you get more than 1.6 million they tax you more. I am aiming at getting out at 55 with 100-110 K per year
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DaveT
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Post by DaveT on Aug 26, 2021 13:49:01 GMT 8
[quote author="@bbevan" source="/post/1314/thread" timestamp="1629931066"[/quote]If you get more than 1.6 million they tax you more.
I am aiming at getting out at 55 with 100-110 K per year[/quote]
How many years are you planning on BB? If you live to 90yo you're going to need more than $2mill. I'd guess?🥳🎉
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Deleted
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Post by Deleted on Aug 26, 2021 16:34:44 GMT 8
[quote author="@bbevan " source="/post/1314/thread" timestamp="1629931066" If you get more than 1.6 million they tax you more. I am aiming at getting out at 55 with 100-110 K per year[/quote] How many years are you planning on BB? If you live to 90yo you're going to need more than $2mill. I'd guess?🥳🎉[/quote] If I live to 90 I get that every year until I'm 90 with indexation so I hope to live for a long time
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DaveT
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Post by DaveT on Aug 26, 2021 18:03:55 GMT 8
"Lucky" man. ( No idea what you do for a living, but I'm sure you've earned a 'defined benefit' of that caliber 👍)
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Deleted
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Post by Deleted on Aug 26, 2021 18:50:41 GMT 8
"Lucky" man. ( No idea what you do for a living, but I'm sure you've earned a 'defined benefit' of that caliber 👍) Certain I didn't earn it but yes Defined from 55 indexed twice, on the upside it might be higher than 100 maybe 115 if things go well
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Post by flanman on Aug 28, 2021 17:50:57 GMT 8
From an actual p.a. perspective, you need to calculate your "want" amount and not your need amount - how you want to live if you had no job. I used a spreadsheet and calculated all amounts that I wanted under different headings. This ranged from electricity/gas/water bills, food/entertainment, mobiles, petrol, medical, furniture etc. I also added all goods >$500 that I would need to replace, then calculate expected aging and value then converted to a p.a. need. Three examples:-
1) Washing machine. I expect it will last for 7 years and cost $900. So I budgeted for approx $130 pa or $3 a week
2) New Car. A new one every 10 years @ $40K. So $4K pa or $80 a week
3) Air conditioner motor. $2K over 7 years, So approx $300 pa or $6 a week
I have about 20 items listed as depreciating then allow for them. You will miss listing a few things - I did, a buggered house aerial. Still, you have always a bit of fat. You also need a buffer amount for total out of the ordinary. Minimum is usually $20K but I would double that.
After I calculate everything - this is my p.a. I "want" and convert that to a fortnightly pension amount. I place all the extra money drawn and not use in a separate account. I keep a track of all incoming and outgoing. You are also best to update all household items as much as you can before you retire plus pay off your house !
It sounds a little complicated but it is fairly easy. 1) Use a spreadsheet to calculate how much you want (including a lot of fat) 2) Monitor you income and outgo 3) Have a good buffer for anything unknown. 4) Calculate a couple of big holiday trips that you want to do over x amount of years. I just put that amount away before I started retirement. N.B. Talk to a financial planner !
As to how much you need ? Well, it all depends on how you want to live. Maximum super balance is now $1.7M before being taxed. Usually you do not draw more than 4% of your balance however, you use more when you just retire and less as when you are older (say 70/75+ years old). I draw just on 6% to enjoy myself. Remember, the fund also makes money for you most times. Also, you can make $20K pa on non-super investments before being taxed.
So what do I look like ? I draw money each fortnight, pay my bills, monitor incoming and outgoing, what is left over I keep in a separate account (mainly the accrual monies for quarterly, yearly bills and breakdown outgoes).
Let me know if you want the simple spreadsheet (with prompts).
FM Retired 2 years last July.
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Post by plazbot on Aug 30, 2021 4:10:55 GMT 8
"Lucky" man. ( No idea what you do for a living, but I'm sure you've earned a 'defined benefit' of that caliber 👍) Certain I didn't earn it but yes Defined from 55 indexed twice, on the upside it might be higher than 100 maybe 115 if things go well Biggest decision for me when I left OZ was leaving my defined benefit and rolling it to an accumulation account. Did the numbers and I'm going to end up same same. Industry fund, returning the usual 8-9%. I went hard early with salary sacrifice in my early 20s and the failing of defined benefits is the way multipliers are calculated. Had I have been in accumulation all along, I would actually be ahead.
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Deleted
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Post by Deleted on Aug 30, 2021 6:01:08 GMT 8
Certain I didn't earn it but yes Defined from 55 indexed twice, on the upside it might be higher than 100 maybe 115 if things go well Biggest decision for me when I left OZ was leaving my defined benefit and rolling it to an accumulation account. Did the numbers and I'm going to end up same same. Industry fund, returning the usual 8-9%. I went hard early with salary sacrifice in my early 20s and the failing of defined benefits is the way multipliers are calculated. Had I have been in accumulation all along, I would actually be ahead. Did you do the salary sacrifice when the cap was higher? There was a point where you could put a lot it. I was too poor to sacrifice my salary. The Defined Benefit does provide a level of certainty but it is not cheap, my salary package consists of: 15 % super 10 % super paid by me after tax 10 % matching of my contribution 3 % productivity payment When people look at the those pensions and say wow that seems good, do they ask the question am I saving 38 % of my salary package. I also salary sacrifice a portion, so saving over 40 %.
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Post by flanman on Sept 11, 2021 20:22:42 GMT 8
The last 6 - 12 months have seen the stock market, housing and investments increase substantially. Superannuation has been a major benefactor with increases across the board - some by up to 30%. Indices have passed pre-covid levels. Why ??
Apart from housing (low interest rates/FOMO), I thought I would try and track it down. It appears that markets have loaded in a post-covid boom that are looking 12 months ahead. Is it me, it seems we are riding a wave of hope rather than reality ? Are we and the rest of the world in great shape ? After all, stock markets around the world are booming in the face of volatility. Is a sharemarket correction due - I think so. Who is going to be holding the baby when it happens ?
Are we also waiting for a real estate correction too ?
FM
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DaveT
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Post by DaveT on Sept 12, 2021 9:54:48 GMT 8
Trouble is, the Reserve Bank cannot afford to raise interest rates without risking the complete collapse of the housing market. For what is now regarded as an "average" mortgage of $600k, repayments are around $2300/mth at 3.9% over 30yrs.( fixed interest loans can be had from 1.9 - 3.9% depending on term). Any wonder people are geared to the hilt. If the RBA raised rates by more than 2%, a massive number of people would default and another GFC would be a definite possibility. Got to feel for 20_30-somethings; property prices increasing at ridiculous rates and if you do win the lottery and buy a house you might not be able to afford to keep it in 5yrs time.
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Post by DropBear on Sept 12, 2021 10:33:55 GMT 8
Trouble is, the Reserve Bank cannot afford to raise interest rates without risking the complete collapse of the housing market. For what is now regarded as an "average" mortgage of $600k, repayments are around $2300/mth at 3.9% over 30yrs.( fixed interest loans can be had from 1.9 - 3.9% depending on term). Any wonder people are geared to the hilt. If the RBA raised rates by more than 2%, a massive number of people would default and another GFC would be a definite possibility. Got to feel for 20_30-somethings; property prices increasing at ridiculous rates and if you do win the lottery and buy a house you might not be able to afford to keep it in 5yrs time. I think you're absolutely right when you say that a significant rate rise will cause major headaches in the housing market. In fact, I'm banking on it happening so prices can come back to a more intelligent level and my kids have a chance to buy. Latest figures I heard were that somewhere around 40% of the housing market is considered to be in a Mortgage Stress scenario. Unfortunately, we live in a world where FOMO is overruling intelligence and common sense. People are borrowing to their absolute limit without any consideration for what may happen to future regarding rates or their own personal circumstances. My suggestion is that if people are mortgaged to the hilt in the current financial conditions then they should seriously consider getting out now while they can walk away with something. It'll be too late to tray and get out if the crash comes when rates go up. The Koala Bear and I are considering an investment property to provide another stream of income during retirement. There is virtually nothing on the market. Every place we've looked at has either had offers higher than the original asking price or are under contract within days of listing. Basically when the ad states offers over $400000 expect the starting offers to be $450000+.
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DaveT
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Post by DaveT on Sept 12, 2021 11:27:24 GMT 8
Trouble for the 20_30-somethings isn't necessarily FOMO per se. Using a median purchase price of $800k ( Melbourne ) they have to borrow to the hilt because prices are rising 4x the rate they can save. To be honest, it's always been that way, it's just that the numbers have inflated by so much in the past 15yrs. With no wages growth for such an extended period it has just exaggerated the gap. How can a dual income couple on even $150k pa, paying $2500/mth rent manage to save a $500k deposit to keep their mortgage in a sensible stratosphere. Not going to happen. Anyway, probably not totally relevant to the thread on Superannuation. Sorry.
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truck
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Post by truck on Sept 12, 2021 11:27:25 GMT 8
Just sold for the reasons above. It just can’t continue at this rate of growth - we might have gone before the peak but once you know it’s the peak you’ve missed it. We bought very well 12 months ago, knew the area, spent some money and did the important things, sold in less than a week for a material gain nett of all buy/sell and reno costs. With kids having done with school there’s also no reason to stay where we are (close to 3 really good schools) despite liking the area so will rent for a bit after travelling and then buy again.
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Post by roxii on Sept 12, 2021 11:41:51 GMT 8
Yep it’s crazy, and you can only assume unsustainable. Cheapest house in our suburb is over 1.6 mil for a fixer upper and wide and I were only saying the other day that the amount of young families moving here is incredible. Must take some big marbles to take on a mortgage of that size as a young couple. The other think of note is that they don’t seem to be going without when it comes to cars etc too. Bank managers must be very generous.
But yeah i can’t see it being sustained fit much longer but the govt can’t afford a crash. That’s what folks are banking on, literally.
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Deleted
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Post by Deleted on Sept 12, 2021 13:29:14 GMT 8
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Post by FatPom on Sept 12, 2021 15:10:38 GMT 8
used to worry about it because losing $600k in a divorce kind of hits hard and you want to make up for lost time. Then we had Little One when I was 49, I'm now 56 and she's only 7. Retirement is not a worry anymore whatsoever.
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Post by DropBear on Sept 12, 2021 16:50:26 GMT 8
Trouble for the 20_30-somethings isn't necessarily FOMO per se. Anyway, probably not totally relevant to the thread on Superannuation. Sorry. I know it may be an isolated case but I saw a young couple overrule the older person with them (the womans Mum I think) and go over their budget by $50K to put an offer on a unit yesterday. Real estate agent was a bit slow putting the offer in her folder and I noticed the previous offer was higher by $25K again which made it $75K above the "Offers over $400000 statement". Personally I thought it was overpriced at $400K. (sh!t location, poor layout which made the place feel small, no lockup garage and I've seen better units for similar or less money) But completely relevant to the superannuation topic. I'm a real life case study here at the moment. I'm 53 and want to retire before 65. Do I put my money into Superannuation and get a relatively safe 6-7% plus a tax deduction for post-tax contributions or do I sink it into an investment property and use the rental income to fund retirement or do I buy land in a new estate and ride the capital gains gravy train or do I hide the cash in under the mattress and try and get the pension. Decision, decision, decisions
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chris
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Post by chris on Sept 12, 2021 18:11:29 GMT 8
Trouble for the 20_30-somethings isn't necessarily FOMO per se. Anyway, probably not totally relevant to the thread on Superannuation. Sorry. I know it may be an isolated case but I saw a young couple overrule the older person with them (the womans Mum I think) and go over their budget by $50K to put an offer on a unit yesterday. Real estate agent was a bit slow putting the offer in her folder and I noticed the previous offer was higher by $25K again which made it $75K above the "Offers over $400000 statement". Personally I thought it was overpriced at $400K. (sh!t location, poor layout which made the place feel small, no lockup garage and I've seen better units for similar or less money) But completely relevant to the superannuation topic. I'm a real life case study here at the moment. I'm 53 and want to retire before 65. Do I put my money into Superannuation and get a relatively safe 6-7% plus a tax deduction for post-tax contributions or do I sink it into an investment property and use the rental income to fund retirement or do I buy land in a new estate and ride the capital gains gravy train or do I hide the cash in under the mattress and try and get the pension. Decision, decision, decisions I can give you the advice but as I don’t hold an afsl I am unable to by law Maybe you should go see someone who can give you the best advice
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Post by DropBear on Sept 12, 2021 19:28:15 GMT 8
Maybe you should go see someone who can give you the best advice And therein lies another issue. Finding one. We did the Financial Advisor thing about 3 years ago. Cost us a significant amount of money and his advice at the time was to put our money in a) a mutual fund with the enticement of a 15% ROI (suggesting reasonable risk). It was a mutual fund that came up in initial discussions and that we'd said we wouldn't invest in due to a prior very unsatisfactory experience b) our superannuation (which we told them we wern't interested in doing at that time) With the advantage of hindsight, not following his advice was a good great decision. We put our money into a ADH property and some shares both of which have returned a safe (but not spectacular) ROI since then. Certainly had no regretsabout what we did back then. I suppose we're lucky in that both the Koala Bear and I have spent much of our working lives in one part or another of the financial industry (worked in Accountants, Superannuation administration and Banks) and so we're not entirely ignorant when it comes to money matters. Our major issue at the moment is the time frame. Property would be nice but its effectively a maximum 10 year time frame to pay it back as we don't want to have debt when I retire (which effectively rules out property in the capital cities and surrounds). Putting money into super is definitely an option now but with our backgrounds in the industry we trust neither the super firms nor the government to protect our investment so close to retirement and/or allow us to have the control over those funds that we'd like to when we retire. Shares is another option but isn't as enticing an option as it was back in April 2020. And with interest rates so low, term deposits arn't any better than putting the money under the mattress and money under the mattress is unknown to the govt (a positive when it comes to the asset test)
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Post by catlady on Sept 13, 2021 7:42:46 GMT 8
a monkey and a dart board would have got you minimum 15% return last financial year. going forward it's going to take a lot more than luck to get similar returns: The can kicking which the Fed has been indulging in for the last 15/20 years is definitely going to be coming home to roost in next year or so. I've been reading John Maudlin for years (since GFC)and he has generally been pretty good in his analysis and also explaining how the whole US system works. Fairly apolitical as well. www.frontlinethoughts.com/he has come up with a couple of scenarios. Don't bother reading if you want to sleep well at night.
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Post by comfortablynumb on Oct 14, 2021 18:00:23 GMT 8
We are aiming for semi-retirement in 2-3yrs with $1.5M+ in Super, plus come other investments, and I'll probably still work 1-2 days/week for a few years. Will own house.
Only very conservatively banking on 3% return from all investments (so need about $2.1M in income earning assets). Hope to leave all the capital to our 2 girls so the poor little blighters might be able to afford houses of their own one day!
We need about $65K pa in todays terms to retire how we want (i.e. several decent trips away each year but mostly domestic).
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Post by comfortablynumb on Oct 18, 2021 12:44:40 GMT 8
Maybe you should go see someone who can give you the best advice Putting money into super is definitely an option now but with our backgrounds in the industry we trust neither the super firms nor the government to protect our investment so close to retirement and/or allow us to have the control over those funds that we'd like to when we retire. I can't see that the industry super funds are a big risk, or that the govt will mess with them too much in the near future? We don't really want 'control' over our super funds - just invested in a plan with low fees, a reasonable return (5-6% would work), and a pension product option. But as you worked in the industry, maybe I'm missing something? If so, I'm keen to hear about it! Property as an investment sh!ts me due to the high transaction costs and dodgy RE agents. We tried it once, probably bought in the wrong place, but so far, super & shares (the later chosen by a decent financial adviser who is on salary, not commission) have been pretty good.
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Post by DropBear on Oct 19, 2021 5:22:26 GMT 8
I can't see that the industry super funds are a big risk, or that the govt will mess with them too much in the near future? From any Governments perspective, the aim of superannuation is reduce the increasing load on the welfare budget by making people save for and fund their own retirement. As such, the biggest issue with superannuation is the "lump sum payout" where people grab their money, blow it all on the big overseas holiday, luxury beachside apartment or the mobile castle on wheels and then go onto the pension because according top the assets test they can. I know people who have done exactly that. Retired, spent the majority of the superannuation on various cruises around the world and then came back and lived on the pension. So to counter this, I'd be expecting any/all of the following to at least raise their ugly head over the next 10-30 years. Changes to Asset test to include the family home. (Brought to you by the housing affordability boffins who spend more time with numbers than real people). Personally I think this one sux but will eventually go through. Changes in the amount of superannuation you can extract as a lump sum on retirement. I'm expecting this option to be virtually removed and only pension options made available. Tax changes on Voluntary contributions (which apparently advantage "The Rich") Tightening of the rules regarding withdrawing super before retirement. Tightening of the rules for SMSF And this doesn't include the plethora of minor changes that get applied every year that we generally don't find out abaout.
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Post by roxii on Oct 19, 2021 5:52:34 GMT 8
Pardon my ignorance on this, but given the amount of shonky folks in this industry why is there not a place for a govt. annuity type scheme. Where you can roll your super into a govt fund for a secure, guaranteed modest return. Given the amount of super in australia it would give the govt a decent slush fund to use or invest and being govt backed would give people the confidence to place their money with them. It could also be integrated into social security to make any potential pension top ups simpler and easier to administer.
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