# Superannuation, will it be worth it when you retire?



## Pager (23 March 2013)

I was talking with a colleague this week whose an accountant and who like me runs his own SMSF, he told me how few people at our workplace either salary sacrifice or take much interest in there Superannuation even when told of the benefits of salary sacrifice, also said how many were burden with debt, big mortgages, car payments, school fees etc, Superannuation was very much an after thought for most people. 

He’s mid 50,s I would guess and went on to say that up until a year ago he put as much as he could into his fund each year but now only contributes the maximum concessional amount which is $25K and that’s it, he even went on to say that this was only for the tax saving otherwise he would leave it at the employer contribution only, his reasons being he can see most people will not have enough super when they want to retire, the burden on the government is only going to increase particularly healthcare for the ageing population, he fully expects those who have done the right thing and provided for a comfortable retirement are going to be an easy target in the future to be taxed even more as there will be little sympathy from the majority (voters) who didn’t take much interest in there super so he’s taken the decision to limit how much he has and also to start doing and spending on some of the things he was going to leave until retirement now, he’s just booked a world cruise 80 odd nights and will use his long service leave and if necessary take unpaid leave in the next few years to do things.

Hi advice to me was think about doing similar when I get into my fifties, don’t let your Super fund get too high and do some of those things most wait for retirement to do, even if it means staying in the workforce for a year or 2 more.

Did make me think he has a point


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## prawn_86 (23 March 2013)

*Re: Superannuation, will it be worth it when you retire*

Personally i just dont see how Super is meant to provide for retirement. I am viewing it as a bonus more than anything, if I do get anything from it in 40 years when i retire.

Even earning at the maximum amount (183k pa) for 25 years will give you a balance of less than 1m. 1m in 30 years time is not going to be worth anywhere near that now once inflation is taken into account, so it wont even be enough to buy a house with, so for all those people who have just racked up debt and are relying on their super they are in for a big shock imo


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## tech/a (23 March 2013)

*Re: Superannuation, will it be worth it when you retire*

Eventually governments will have to get serious with Super and allow concessions well beyond those available now.
They are far to concerned with lost taxes to service the current deficit ( in whatever period now or 30 yrs ago or 30 years going forward) than the massive looming cost of retirement which they haven't put aside and won't!

No roof on contributions past the age of 50 and massive tax savings would be a start.

But for those of us who can't see this happening in our lifetime.

Here is my advice.

Find a way to create* PASSIVE INCOME* it's your/our only hope!

You will never save enough for those savings to generate enough.
But you can use savings in a way that will produce passive income rather than
Being stagnant in a Superfund earning bugger all.
My SMSF does just that --Creates passive Income but if I didn't have a Superfund doing that
I wouldn't let my money sit there doing very little on a prayer that someone is going to make me a mottza.

Oh and* sack* your adviser.

That's just head in the sand--this is all to hard stuff.
Doesn't help anyone you'll come back penniless and too
old to fix it!


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## sydboy007 (23 March 2013)

*Re: Superannuation, will it be worth it when you retire*

I might start to add more to my super once I'm in my mid 50s and can see the light at the end of the tunnel.

What people need to remember is super is really just a tax effective shelter for savings.  It is not the end game, or the be all and end all in savings.

I'm quite happy to use after tax income to invest for my retirement.

Considering the tax forgone on super is no more than the aged pension, to be it's not a cost effective way to help alleviate the budget costs of the aged pension in the future.

Unfortunately getting people to plan ahead for next year is hard enough, let alone 25+ years into the future.


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## Pager (23 March 2013)

The biggest problem I see is that people DO SEEM TO THINK that there super they take very little interest in and don’t voluntarily contribute too will see them retire comfortably at 60 or 65.

The few who have done the right thing will end up having to subsidise those who haven’t via tax, they will be easy targets for future governments who are looking for more ways to raise the revenue needed to service an ageing population, those with good size nest eggs will see them plundered, the only fix as far as I can see is to raise the amount employers have to pay into Super and give as many incentives as possible for people to contribute themselves but even that will take many years to flow through and most governments are very short sited when it comes to the long term benefit of the country unless there is some votes in the short term to be had. 

There’s also another point that I think is worthwhile (well for me anyway) and that is to do things you plan in retirement before you retire like a world cruise, being younger and more active it, you may get far more out of it and have the memories and experience of having done it.

Personally I have no plans to retire, I enjoy working and feel sorry for all those people that hate there jobs, if you don’t like it, then change but so many are slaves to the debt they have given themselves and cant or wont change.


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## Julia (23 March 2013)

sydboy007 said:


> What people need to remember is super is really just a tax effective shelter for savings.



Yes.  We keep hearing stuff like "super isn't a good investment" etc., as though it requires no active management to make it grow.
It's the same as savings in any other environment but with a tax advantage, and the potential disadvantage of sticky fingered governments helping themselves to it.



Pager said:


> The few who have done the right thing will end up having to subsidise those who haven’t



This is already the case to some extent.  Self funded retirees pay, e.g., full property rates, thus subsidising those who are receiving government benefits which carry rates concessions.

Governments need to get serious about Super quickly.  Instead, they continue to foster the entitlement mentality with vote buying middle class welfare etc.  There is little appreciation amongst the public about the limitations that are going to apply in thirty or so years' time re pensions and good health care.

I'll be surprised if quality retirement and health care doesn't become necessarily more and more privately funded.


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## Smurf1976 (23 March 2013)

I see Super as a high risk environment simply because there is so much government involvement.

Suppose that I put heaps into Super, invest wisely and can afford to retire at age 53. Government says no, I must keep working even though I can afford not to.

Where is the guarantee that the preservation age won't be raised in the future, thus effectively confiscating the wealth of savers?

It is also an unfortunate reality that for many people, the last years of their life are a definite wind down. Thinking of all elderly people you have ever known, how many have passed the age of 70 in a position to genuinely enjoy themselves? Sure, some do but there's an awful lot who will have health issues themselves, or their partner has health issues (or has passed away), by the time they reach that age.

I know 5 people who are about age 70. Of that 5:

One is in relatively poor health. No longer drives but is reasonably able to catch a bus and go to the local shops etc. I'd be surprised if she ventures out of the state (Tas) ever again, and certainly won't be going out of the country or on any cruises. She lives by herself.

Another is the same age within a few months. Health is reasonable but has some issues. Still drives. She might foreseeably get on a plane and head somewhere in Australia to visit family but that would be about the limit. She lives by herself.

Another is just under 70 and still working. It's only a matter of time until his employer brings about a forced termination on account of failing health (if he doesn't come to his senses sooner). He's survived a heart attack and has very obviously deteriorating mental abilities (beyond that expected with normal aging). He lives by himself.

And the other two are a couple. Both still drive and they travel frequently within the state and could foreseeably travel interstate or overseas although I doubt they will actually do so (at least not overseas). He's had a major heart operation with success, she seems to be in reasonable health.

So that's 2 out of 5 who could reasonably spend some money and have some fun past age 70, and even then that's only after a major health scare along the way for one of them.

For the record, only one of them has regularly smoked to my knowledge and only one other has drunk more than occasionally so I'm not talking about an unusually unhealthy bunch here. For every person who passes 70 in good health for them and their partner, there are an awful lot more in relatively poor circumstances.

There's no point having $1 million left on the day of your funeral. Better to have some fun with it while you're still alive and fit enough to enjoy it. Invest certainly, but most people aren't actually going to be spending big on holidays etc in their 70's. Some will, but not most.


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## SMSFguy (26 March 2013)

I've seen some large super funds $1M - $3M+, husband and wife but no kids! in there 60's+ and its actually kind of sad. It's like they have been saving for a rainy day that will never come. 

But it's true $25K is terribly low, but will likely get back up to $50K when the mad-monk becomes PM.

I have met a lot <$500K SMSF clients some are planning to relocate to south-east Asia to live there for their retirement, because the cost of living is cheaper. But others I feel will spend through it before they get to 70 if they stay here in OZ.

Here's hoping the aged pension will still be around when we retire.


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## skc (26 March 2013)

*Re: Superannuation, will it be worth it when you retire*



prawn_86 said:


> Personally i just dont see how Super is meant to provide for retirement. I am viewing it as a bonus more than anything, if I do get anything from it in 40 years when i retire.




+1. The tax benefit of super doesn't outweigh the risk of government rule changes and flexibility - for those who are under 45 and can save and invest for themselves. 



Smurf1976 said:


> It is also an unfortunate reality that for many people, the last years of their life are a definite wind down. Thinking of all elderly people you have ever known, how many have passed the age of 70 in a position to genuinely enjoy themselves? Sure, some do but there's an awful lot who will have health issues themselves, or their partner has health issues (or has passed away), by the time they reach that age.




Here's a good solution...from George Costanza



> The most unfair thing about life is the way it ends. I mean,life is tough. It takes up a lot of your time. What do you get at the end of it? A death. What`s that, a bonus?
> 
> I think the life cycle is all backwards.
> 
> You should die first, get it out of the way. Then you live in an old age home. You get kicked out when you`re too young, you get a gold watch, you go to work. You work forty years until you`re young enough to enjoy retirement. You drink alcohol, you party, and you get ready for High School. You go to grade school, you become a kid, you play, you have no responsibilities, you become a little baby, you go back into the womb, you spend your last 9 months floating...then you finish off as an orgasm! Amen


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## SuperGlue (26 March 2013)

*Re: Superannuation, will it be worth it when you retire*



skc said:


> I think the life cycle is all backwards.
> 
> You should die first, get it out of the way. Then you live in an old age home. You get kicked out when you`re too young, you get a gold watch, you go to work. You work forty years until you`re young enough to enjoy retirement. You drink alcohol, you party, and you get ready for High School. You go to grade school, you become a kid, you play, you have no responsibilities, you become a little baby, you go back into the womb, you spend your last 9 months floating...then you finish off as an orgasm! Amen





Sounds like the movie "The Curious Case of Benjamin Button" starring Brad Pitt and Cate Blanchett.

Someone to take care of you when you grow old, err, err grow young.


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## Smurf1976 (26 March 2013)

Had this conversation today about someone.

69 years old, health declining, is in a government defined benefit super scheme.

So why bother turning up to work every day? It's a manual labour outdoors job, it's not as though he's an artist or something like that where someone might genuinely love what they do. Crazy in my opinion but nobody has thus far convinced him.


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## againsthegrain (26 March 2013)

I still have another 30 -40 years of working ahead of me and always hated the idea of super.
I chuck it on the most aggressive risky plan as possible while not putting any extra contributions.

I see no possible way that when I do retire more like if I am still alive, our government is still around it will be worth peanuts in the face of inflation.

For me it is already written off as one big lost opportunity while on top I am forced to pay fees for the privelage 

Only way I see is working towards funding my own retirement and establishing many avenues of passive income. Still have around 40 years


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## SMSFguy (27 March 2013)

My personal view is you need to get your wealth in a more tax-effective environment pre-retirement. 
Super is the only tax-effective vehicle available to us (short of going ex-pat). But at the same time its like the current government are setting up IEDs on the road - one mistake and its going to set you back.

Get back to the basics - pay off the house you are living in first! Then if you are going to take up the journey into super/SMSF keep it simple, don't go into any of them fancy financial instruments you don't understand.


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## Tisme (27 July 2015)

I see that the public servants will need another $110bn dollars form us to cover their retirements. 

Howard already sold most of the farm to set up  Costello's "Future Fund" and flip money from the balance sheet into the P&L and there isn't any big replacement asset like the NBN was supposed to be, so I'm wondering what this govt govt can lever off to finance it's liabilities to the beneficiaries for all their hard work.

$110 billion dollars !!!!


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## tech/a (27 July 2015)

againsthegrain said:


> Only way I see is working towards funding my own retirement and establishing many avenues of passive income. Still have around 40 years




Smart man


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## Anglers Rest (28 July 2015)

There is so much uncertainty regarding taxation of superannuation, age of access, etc. that who knows what we will be able to use 40 years from now. I'm investing outside of super for my retirement and only contribute the minimum, except that as a post-grad student I am taking advantage of co-contributions as the risk return on that portion seems attractive to me.

I don't imagine that successive governments will be able to resist keeping their hands off of our super. There's just too much money sitting there for them not to be tempted.


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## christianrenel (3 November 2015)

Anglers Rest said:


> There is so much uncertainty regarding taxation of superannuation, age of access, etc. that who knows what we will be able to use 40 years from now. I'm investing outside of super for my retirement and only contribute the minimum, except that as a post-grad student I am taking advantage of co-contributions as the risk return on that portion seems attractive to me.
> 
> I don't imagine that successive governments will be able to resist keeping their hands off of our super. There's just too much money sitting there for them not to be tempted.




I have to agree with the comments that the superannuation is long term investment. But the systems needs to change to make in workable for future genarations. 

One big myth about superannuation is that the currrent contributions by employers of 9.5% per year is sufficent in providing enough money to to live off for 30 years. If individuals a serious about using the superannuation as a retirement income 15% contribution into super would be the minmal amount.

The superannuation system for young individuals is good back up for wealth creation, but having other plans are needed.

Kind Regards 

Christianrenel


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## poverty (16 November 2015)

I am prepared to gamble my super.  If the XJO ever gets back down below about 3400 in the near future I'm planning to shift the whole thing and future contributions into a geared fund option and quadruple up on the way back up.  Retiring with a low super balance is nothing but a bit of a bonus, almost like a redundancy package.  

But at the same time I am not prepared to put extra into super at the age of 37, I prefer to invest outside of a tax shelter so that I have the option to experience cash flow from my investments.  I could choose not to reinvest dividends and spend them on food, rent or put towards a house deposit.  Investing extra in super is money locked up that you may never even live to see.  Maybe when I'm 55 I will have enough income from franked dividends to retire, 5 years before I can even access my super and 12 years before I could even think about claiming the aged pension.  That's the goal anyway.


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## Darc Knight (24 October 2018)

_"Former Labor prime minister Paul Keating has reiterated his call for a national insurance scheme to support Australians aged 80-plus.  ........
Mr Keating told Tuesday's Superfunds Round Table that the retirement system needed to adapt to changes in life expectancy.
When the superannuation system was designed 32 years ago, people retired at about 65 or 66 and died at 81," he said.
"We are now living nine years longer. Accumulation at 9.5 per cent of average weekly earnings can't be stretched out to cover that longevity."_

https://www.afr.com/personal-financ...nce-scheme-to-support-elderly-20181022-h16z7o


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