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Tuesday, 21 September 2021
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Despite the maturing of the super system, 70% of retirees rely in part or full on the age pension. Access to pensions will become more restrictive and fewer people will have options such as a reverse mortgage.
Many self-funded retirees will outlive their savings as most men and women now aged 65 will survive at least another 20 years. Compare your spending with how much you earn to see how long your money will last.
Claims about the inequity of super tax concessions and the advantages for high income earners miss a fundamental point. It's fairer with more realistic assumptions on the value of future payments.
Half of Australians retire early due to unexpected circumstances and within timeframes they did not choose, and two-thirds of pre-retirees worry about funding their retirement. But neither are the greatest fear in retirement.
There are many items in the 'too hard basket' for super. Remember the proposed Retirement Income Covenant? It required trustees to develop an appropriate strategy for members, and it's time to progress with it.
The Retirement Income Review demonstrated limited understanding of the risks faced by self-funded retirees implementing rational human behaviour. Spending to qualify for the age pension is not a solution.
It's often overlooked how wealthier couples can fall back on the age pension if a market loss hits their portfolio. The reassurance is never greater than in a financial (and now epidemic) crisis.
A study of actual spending habits shows retirees have a faster-than-expected drop-off in spending in later years, casting doubts on financial plans that assume increasing expenditure over time.
When more than half of retired Australians restrict their spending to less than the age pension and fear running out of money more than death itself, they may be denying a better lifestyle for themselves.
The design of superannuation is part of a social contract, and people who do not understand the long-term context are often offended that super funds should be tax-free in retirement. Don't blame Peter Costello.
The proposal to increase eligibility for the age pension to 70 was driven by budget austerity, but it overlooked the vulnerable people who could not wait that long.
Lower spending strategies and the right investment options are crucial to giving superannuation members the best chance of making their super last for an average 25 year retirement.
Who knew? With some surprise results, the Government is on unexpected firm ground in asking people to draw on all their assets in retirement, although the comments show what feisty and informed readers we have.
The RBA Governor says rising house prices are due to "the design of our taxation and social security systems". The OECD says "the prolonged boom in house prices has inflated the wealth of many pensioners without impacting their pension eligibility." What's your view?
It's a remarkable statistic. In any year since 1875, if you had invested in the Australian stock index, turned away and come back eight years later, your average return would be 120% with no negative periods.
Never stand between Australian households and an uncapped government programme with $3 billion in ‘free money’ to build or renovate their homes. But excess supply is coming with an absence of net migration.
Picking macro trends is difficult. What may seem logical and compelling one minute may completely change a few months later. There are better rewards from focussing on identifying the best companies at good prices.
Some high-quality companies have emerged even stronger since the onset of COVID and are well placed for outperformance. We call these the ‘COVID Opportunists’ as they are now dominating their specific sectors.