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Wednesday, 20 October 2021
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1997 Nobel Laureate Robert Merton wants greater focus on the income that will sustain a retirement, and even Jane Austen understood this. And he has a surprising proposal to help with longevity risk.
The traditional asset based pension is not usually sufficient to provide a total income that keeps pace with inflation, even with the help of the age pension. A real lifetime pension is one way to preserve old age dignity.
Transition to Retirement Income Streams are no longer tax-free, but you can still access your super before retirement if you meet certain conditions, and there are strategies to reduce the tax paid.
Defined benefit pensions once meant sitting back and enjoying the guaranteed income flow for life, but their treatment under the new pension rules is a potential minefield.
Nobel laureate Robert Merton wants us to focus on the income that will sustain us in retirement, even Jane Austen understood this. And he has a surprising proposal to help with longevity risk.
A unique feature of SMSFs is the concept of 'superannuation interests' which must be monitored to keep track of the taxable components in a super fund. Good records can avoid problems later.
Many factors contribute to a lump sum bias among investors, and it might be one reason why they significantly overestimate how much a lump sum is worth in annual income for life.
Get ready for more pension-related changes: from 1 January 2015 the way account-based income streams (including account-based pensions) are assessed under the income test for Centrelink purposes will be changing.
Less than 15% of Australians will enjoy a 'comfortable' standard of retirement with just their super. The age pension doubles the numbers, but there’s an even larger increase if other savings are included.
A reader sent in an excellent question on the merits of lifetime annuities versus long term indexed bonds for post-retirement income. Jeremy Cooper and Elizabeth Moran make the case for each.
Australian research on retirement withdrawal rates challenges the long-accepted ‘4% Rule’ used by many planning professionals when advising self-funded retirees. The optimal rate? Well, let's start a conversation.
It's highly likely that the age pension will experience future reforms. A useful financial plan should model a reduction in pensions, rather than making an assumption that it'll be there when the money runs out.
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?
We tend to forget that house prices often fall. Direct lending controls are more effective than rate rises because macroprudential limits affect the volume of money for housing leaving business rates untouched.
The survey drew a fantastic 2,000 responses with over 1,000 comments and polar opposite views on what is good policy. Do most people believe the home should be in the age pension asset test, and what do they say?
Any policy decision needs to recognise who is affected by a change. It pays to check the data on who pays taxes, who owns assets and who earns the income to ensure an equitable and efficient outcome.
With articles on the pensions assets test read about 40,000 times, 3,500 survey responses and thousands of comments, there was a lot of great reader participation. A few comments added extra insights.
It is hard to think of any area of widespread public concern where the same policies have been pursued for so long, in the face of such incontrovertible evidence that they have failed to achieve their objectives.