I was pondering earlier the while point of Superannuation - to provide for people in retirement and to alleviate pressure on Govt funded pensions. I'm not saying it is a good system, but it is better than nothing at all. There are obvious pitfalls, such as Super organisations becoming too powerful, too interlinked with the stock market, or even too big to fail, but it was a decent attempt to deal with the issue. However, since the property boom/bubble, a growing number of people have been either using super to pay their mortgage (if in distress), or waiting for the day when the get a lump sum to put it on the house and then go on a pension. Based on this behaviour, funding designed to pay for retirement is now just a part of the housing bubble. So this implies that the whole point of having Super is increasingly irrelevant, and there will be increased claims for retirement pensions instead. This is symbolic of the unintended and unforeseen damage that such structurally unsound activities can produce. And the irony of the Govt providing tax incentives and grants to sustain and grow the bubble. What does this mean for Australia's future? How will our Govt and economy cope with a barely functioning Super system? Thoughts?
It is compounded in my view by the developing trend of people being encouraged into SMSF to leverage into the housing market as an investment. It may be a good idea but to me when hearing ads on radio to start your smsf borrow and buy property all through one point just screams RUN to me. It may well be the next place alot of people loose a chunk of their super... I may be wrong too. Like all things some will do well, and the one who expect others to do their work for them will get shorn.
Great point. Just another example of government borrowing from the future so they look good today. Having said that, my opinion is super is the best vehicle to become wealthy. The tax concessions are great, both within the fund and going into the fund. So like most things, if you use it wisely it should work well. Abuse it and you're going to run in to problems.
Somone once said, Super should be considered as 1 leg of a 3 legged stool that supports your retirement. 1. Superannuation 2. The Pension 3. Personal savings/investments I don't think the average punter can REALISTICALLY rely on super alone. Those of us on this forum are another matter. We're switched on enough to invest wisely enough in our SMSF to be able to use it alone...everything else is just the"cream" on the cake.
Super is a cr@p idea - it's just another tax. The 'pension' should be either: 1. paid to nobody, i.e. no payed pension 2. paid to everybody - as in Europe. It's ridiculous that government can continue rewarding certain people and punishing others via the pension system (ie. redistribuing wealth) - it's a rotten stinking socialist idea that sucks big time!
http://www.abc.net.au/worldtoday/content/2012/s3568235.htm * mmmmm? I wonder where that money comes from then? And just a quick quote from Wikipedia about The Australia Institute:
Ha ha! As some of the guys on here know, last night I was sucked into going into one of these seminars. They had sold it as learning about setting up, structuring and using SMSF's and it turned out to be a 1.5 hour sales pitch on buying leveraged negatively geared property and about 5 mins on using an SMSF to do the same. Unfortunately given the huge line of people who were signing up for a further 1-on-1 personal session I think we will see a lot of people's superannuation evaporating in the next decade through these ponzi sales schemes. One of the historical benefits of super was the distinct lack of ponzi bank debt meaning that any real cash generating assets would still be generating cash at retirement. Seems that has now gone sometime over the past few years (there are way too many changes for me to keep up with what's allowed/not allowed etc).
I think the pension was a bad idea from the start. I'm all for helping people in society who need it, whether old or not, but I think the pension seems to be held out as a reward almost for being a good little boy/girl and working your butt off and paying your taxes. My father certainly approached it that way and worked his butt off for not a lot and has now retired and has little to do with his days. Almost like he treated it as a destination that he was trying to get to rather than treating life as a long journey to be enjoyed. You know, kind of, the brief holiday you get before you die. Some people remain quite healthy and active into their old age and some of them work through much of it. I was recently at a job working closely with a guy in his 60's who played tennis regularly, has over a million in the bank, had retired but didn't like it and decided he preferred to work full-time. What I'm saying is I think we as a society have entirely the wrong mindset when it comes to old-age and life in general. I think neither pension nor superannuation nor any such scheme is going to get the results that we want because I think they are essentially unachievable. However, I think the current paradigm that our society works under just won't accept alternative ways of thinking about it. I think it's another case of the free-thinkers who manage to put things in perspective rather than following the crowd will generally do fine while the rest who go along and look to government will generally do not so well.
One of the important messages from that crappy seminar was that it reminded me about the whole motivation for super in the first place - namely the Government simply won't be able to fund the baby boomer generation and hence the system will change towards a greater reliance on self-funded retirement (or dying in the gutter, one of the two). Keating said this as far back as 1983. This figure is from the 2010 Intergenerational Report: Even though I bit tricky to interpret it is basically showing that currently we have 5 working age people per retirement age person (and I believe somewhere between 4-5 taxpayers per pensioner). When the pension system was set up the numbers were apparently something like 12-14 taxpayers per pensioner. Even with strong migration embodied in the demographic projections, the number is projected to fall to ~2.6 working age people per retirement age person (at the seminar they said 2 taxpayers per pensioner). This ignores our parasitic kids - but there not as burdensome as oldies who have greater health costs :lol: What this says to me is that - on average - we are screwed no matter what we do. As per the "Rich Dad Prophecy" book (which I haven't read in years) there will essentially be: 1. an asset rich class of retirees who need to sell a whole bunch of assets into a market with less and less buyers. 2. This will force down the wealth they thought they had available in super whether any one likes it or not. Hence, retirees annual incomes will be seriously lacking compared to expectations (even if they did manage to succeed in not losing it all from buying leveraged negatively geared property through their SMSF's and the like). 3. The pressure for society (and particularly the government) to have larger income transfers from the workers back to the retirees will be huge. 4. In the absence of massively cheaper ways of prolonging life, health costs will be a huge burden on the economy. This will increase the pressure for income transfers. 5. Most people of retirement age won't (be retiring when they expected). In the absence of a robotic-dominated utopia (which may actually be possible) the only way the economy will manage these stresses will be through more people working well past traditional retirement ages and/or longer hours etc. In light of this basic trend I think it is useful to think about which types of assets will actually have a higher purchasing power in 20, 30, 40 years time so that my retirement assets will actually exist in a suitable quantum that I can be one of the few who will be truly self-funded even with a significantly higher ratio of non-workers to workers.
Don't know about that. In theory super is amazing but in practice we don't know for sure at least not until the system's mature enough to see results. There's always the argument where some people don't consider super as 'their money' and ignore it whereas if it was part of their actual paycheck they would give a shit & maybe invest it properly. Not to mention super has a whole plethora of bureaucratic crap involved (aka. paperwork/legalese) which limits investing options. Not sure why this is a pitfall unless you mean super firms may push for legislation which hurts the little guys? From what I gather speaking to people who work in private firms that provide super is that they are losing customers left right and center to SMSFs and industry super funds. I guess industry super funds could introduce stuff that is detrimental to SMSFs but so far this doesn't seem like a very likely pitfall if at all to me. Unfortunately almost everything is linked to the stock market. The economy, housing prices, jobs, the lot. The stock market is basically a gauge on how well the economy performs so it's no surprise they're linked. Super or no super this will always be the case. Definitely a problem but this is something which is harder to discern. Super itself doesn't just collapse like a bank. Super investments however, do collapse. Perhaps those investments would get bailed out but then that's a non-super related thing. My POV is that property in Australia is already a too big to fail industry but I digress. I'm more concerned about how super rules change and will change over the next 40-50 years until when I can touch my super. With the aging population and the shrinking birth rates we're going to look just like Japan (them in 10 years) and China (them in 20-30 years) in the next 40-50 years. The government be it Gillard or Abbot are incapable of thinking so far into the future. Perhaps super will be pooled together as a special fund for 'helping the country' through the government mandated (forced) purchase of 'pension bonds' which eventually gets written down when the government realizes it can't pay the $ back. That or they increase the taxes again substantially. Or we have our own little QE. The problem with increasing tax or making the rules too draconian is that with the trend of globalization there is no need for anyone to feel forced to stay in Australia. Thus to be internationally competitive there's a limit to what Australia can do to raise funds to pay out pensions in the future and I firmly believe that they can and will tap into our super funds as a starting point. I am also sure that most people think their superannuation is enough to retire on but unfortunately that is NOT true. These same people will probably go and whinge to the government and get their pension payout. Thus we will see fun times. I think I went off topic with my random rant .
Nah Rothchilds (with some mob called Customer First Financial Solutions). They held it at Olim's (which has now been renamed to Mercure or something). I don't think they were trying to push US housing. I went to one of Dixon's way back in 2008 or 2009 when they started this but thought the risks were waaaay to great versus the potential reward. After some of the posts about the hazards of international property investing on other threads I am glad I steered clear.
Well, you can always setup a security state to lock people and/or their capital in and prevent it from leaving the country. Or if you are really powerful, say the largest power in the world, you can chase your citizens all over the world for their tax burden. Hmmmm, there's an idea..... It will come down to which generation has the most political power in the end as to determine whether the retirees get what they were promised. As always with these things it will be nasty and someone is not going to get what they want. And there is always the prospect of using inflation so that people think they are getting what they were promised but in fact aren't. Every previous generation of retirees, it appears to me, have been screwed over in one way or another. It remains to be seen if the BB's collectively will have enough political might to enforce their will and break the trend.
I agree but the US market is showing signs of having bottomed and is returning well. Can't remember where I read it but it was a source I trust as opposed to main stream. I think it was Schiff. I also read somewhere Dixon has an ASX etf. It's not for me yet, I'm doing well with shares ATM.
Well, judging by the news today about raising the retirement age to 70, looks l won't be bothering with my citizenship then. I always knew there was a reason I hadn't bothered.
