Baby Boomers Are Retiring

[Bill M]

with defined benefit plans, what happens if you die.

Does the spouse still recieve payments,

I had to do a read up on the facts sheet. The answer is yes, it is passed on to your spouse. I also checked the employer sponsored part of the deal, it is in fact 2 and a half times final salary not 3 as I stated before.

Virtually all employees who were employed by the NSW state Government prior to 1993 when this fund was closed off to new entrants are still paying into these funds. That amounts to 10's of thousands of people.

---

It is one of the largest superannuation schemes in Australia, managing more than 136,022 accounts and more than $30 billion in assets at 30 June 2010

---

Link to the Facts Sheet

 

[Bill M]

Bill, I hate to disillusion you, but when the Irish economy tanked, the first thing they did was to decrease the payout from funds like this.

It could happen here.

Until you actually have the $ in your hands it is not yours unfortunately.

gg

There would be blood on the streets if this happened. People are pouring as much of their salary into these funds right now preparing for retirement. In NSW alone there are 136,000 paying into these funds and to change the rules now after a lifetime of contributions is just not right and unfair. It will be the end of any government willing to bring it on. The cops, firemen, bus drivers, cleaners, ferry workers, nurses etc are still being encouraged to pay into these schemes. We are talking normal Joe Blows on less than average salaries. But I do get your point, nothing is in the bag until it is there in front of you.

Why don't these b@stards in Government bring their own over generous super schemes into line with mainstream Australians super? That will never happen will it.

 

[doctorj]

Bill, I hate to disillusion you, but when the Irish economy tanked, the first thing they did was to decrease the payout from funds like this.

It could happen here.

Until you actually have the $ in your hands it is not yours unfortunately.

gg

Same can be said of the defined contribution plans. When governments around the world hits a bit of a rough patch, the temptation to transfer the funds back to the state can become too much. Hungary (might sound like a dodgy eastern European place, but it's European Union...) did just this in the last couple of months.

 

[Julia]

Isn't all this speculation (dare I say fear mongering) based on a wrong premise?
It seems that once again "Super" is being regarded as an investment in itself, rather than simply a tax advantaged vehicle in which to hold assets.

If the public super funds hold employee contributions in, say, Australian shares, and cash, then if someone wants to withdraw what they have contributed, surely the super fund just has to sell whatever number of shares is appropriate plus the proportion in cash etc to give the retiree their share?

The worst that could happen would be a significant fall in the SP of the companies concerned, simply offering an opportunity for those who will jump at the chance to buy good companies in a dip.

But if you're worried, then set up your own SMSF and take charge of your own money.

 

[Dona Ferentes]

Topic:

Baby Boomers Are Retiring​

And not shy about it. And along came Covid; saw this recently. It relates to U.S. and in the context of worker shortages, participation rates... etc ... and lingering inflation.

 

[divs4ever]

From the comments about the article

illiquid assets which depending on the timing may even include Government bonds

the recent US bank failures show want can happen when there is heavy selling of a class of assets

 

[sptrawler]

It isn't all beer and skittles for baby boomers, well unless you own a house in Sydney/ Melbourne.
Retirement comes to everyone, make sure you plan carefully, because everyone thinks all baby boomers are rich.
A bit like saying all 50 year olds are rich and 40 year olds are well on their way to being rich, cherry picking some in the group and applying it to the others is fraught with danger IMO.

This grandfather worked his whole life. Now he can't afford to buy groceries

Bunbury resident Bob Barber says he and his wife would be "starving" without food support from organisations like Doors Wide Open and Foodbank.

www.abc.net.au

 

[divs4ever]

It isn't all beer and skittles for baby boomers, well unless you own a house in Sydney/ Melbourne.
Retirement comes to everyone, make sure you plan carefully, because everyone thinks all baby boomers are rich.
A bit like saying all 50 year olds are rich and 40 year olds are well on their way to being rich, cherry picking some in the group and applying it to the others is fraught with danger IMO.

This grandfather worked his whole life. Now he can't afford to buy groceries

Bunbury resident Bob Barber says he and his wife would be "starving" without food support from organisations like Doors Wide Open and Foodbank.

www.abc.net.au

the average retired boomer won't stay 'rich ' long with real inflation over 8% and most savings accounts paying less than 5% before tax

 

[wayneL]

I'm 62 in a few days, so a late boomer. Ive got enough to retire on, live my favoured Bohemian lifestyle, and not had have to dip into capital or experience the thievery of an annuity.

Additionally, mrs *probably has a multi-million dollar inheritance at some stage in the next ten years. (Better be on my best behaviour and not taking that for granted )

That said, I don't even think I want to retire anytime soon. I think being useful keeps me young (and out of the house pi55ing off the missus lol).

 

[UMike]

Cambodian Prime Minister Hun Sen, one of the world’s longest-serving leaders, is to resign and hand power to his eldest son after almost four decades of hardline rule.

If Hun can retire maybe I should as well.

 

[farmerge]

Cambodian Prime Minister Hun Sen, one of the world’s longest-serving leaders, is to resign and hand power to his eldest son after almost four decades of hardline rule.

If Hun can retire maybe I should as well.

Reeks of jobs for the boys

 

[farmerge]

I'm 62 in a few days, so a late boomer. Ive got enough to retire on, live my favoured Bohemian lifestyle, and not had have to dip into capital or experience the thievery of an annuity.

Additionally, mrs *probably has a multi-million dollar inheritance at some stage in the next ten years. (Better be on my best behaviour and not taking that for granted )

That said, I don't even think I want to retire anytime soon. I think being useful keeps me young (and out of the house pi55ing off the missus lol).

Wayne hear hear.
I am 73 and have no real intention of doing the retired thing.
I can and do have days off when I want and do my best to keep She who is never wrong on my good side.
It's a nice feeling to be appreciated by those who have employed me to do the sort of work i undertake.

 

[farmerge]

the average retired boomer won't stay 'rich ' long with real inflation over 8% and most savings accounts paying less than 5% before tax

So what's the answer. Find part time job preferrably paying folding, and still enjoy doing whatever.

 

[divs4ever]

So what's the answer. Find part time job preferrably paying folding, and still enjoy doing whatever.

i am going for cutting expenses ( nearly everything you do incurs GST , stuff like fresh herbs in the garden recycle food waste via a hen

and lucky for me 'whatever ' rarely means accessing a booking agent ( no big over-riced events, cruises , flights )

 

[Dona Ferentes]

Our investment thinking changes as we get older​

It’s well known that human beings are loss averse. By this is meant that, if (as an example) we’re given a 50/50 chance of winning or losing some specific amount (let’s say $500) based on a heads-or-tails toss of a coin, we tend not to want to play. Unless, of course, the amount is small (let’s say $10), and the sheer thrill of playing is worth it, even if we lose – in other words, we’re willing to pay to buy the thrill; but as a serious investment proposition, no.

What we tend to want, in an example such as this, is that the game is biased in our favour: perhaps $500 either way, but with the odds favouring us, say a 70% chance of winning versus only a 30% chance of losing; or, if the odds stay at 50/50, then a win is worth $700 versus a loss costing us only $300.

This attitude of loss aversion has been documented through countless research studies, and it is one of the main conclusions of the brilliant research (now known as 'prospect theory') done by Nobel Prize winner Dr Daniel Kahneman and his research partner Dr Amos Tversky.

When you think about it, this bias, built into our brains, must have been very useful to human beings in our early days, when our survival as a species was in question. Taking chances was clearly something to be avoided, if we wanted to survive, unless the chance of failure was low or carried only a small loss. If we had been a species taking big chances, we probably wouldn’t be around today.

And our brains have not changed very much over the millennia: it’s just the situations we face today that are very different. But our brains aren’t.

I first came across loss aversion when I was studying behavioural finance, as a pension fund investment consultant many decades ago. It was totally consistent with the way in which pension fund fiduciaries behaved. Limit your losses before you go for gains. I tried to express it in a way that was succinct and easy for clients to remember: First survive, then thrive.

It’s taken for granted these days. So I was very surprised to find recently that, though the general notion of loss aversion still applies, there are circumstances in which our mental attitudes change. I’ll expand on this in a moment.

A second well-known characteristic of human beings, as we make decisions, is that we look at the near future as much more important than the long-term future. This is often called hyperbolic (that is, exaggerated) discounting: a jargon-based way of saying two things.

One is that we discount the future. In other words, the present is far more important to us than the future, and given a choice between having something soon and something in the medium to long term, we place far more value on near-term gratification.

More than that: we discount the future inconsistently. We have, for example, no problem saying that something now is worth much more to us than something in a year’s time; but we place virtually no difference between getting something in 25 years and getting that same something in 26 years. That one year of postponement makes little difference to us if it’s in the distant future, but a big difference if it’s fairly close to us.

All of that too is now accepted wisdom. And again, I was surprised to find recently that, though the general statement still applies, it’s not quite as clean as my quick description of our behaviour makes it appear.

That’s what this post is about: the fact that that accepted wisdom is more nuanced than is generally known. And it leads me to someone I’ve admired for a long time: Dr Laura Carstensen, the Fairleigh S. Dickinson Jr Professor in Public Policy and Professor of Psychology at Stanford University and founding director of the Stanford Center on Longevity.

Emotional satisfaction becomes more important when older​

Laura has influenced the way I view life, following her book A Long Bright Future: happiness, health and financial security in an era of increased longevity. Essentially it says: if we knew we were going to live 100 years, would we still live our lives the same way? Go to school, work, retire, as has become customary – and then keep that retirement stretched out until 100? No, we wouldn’t, we’d pace our 100 years differently. In another blog post some time I’ll outline her ideas – but for now let’s just say that her book has changed my thoughts on life.

So, when I got a chance to chat one-on-one with Laura at a friend’s gathering recently, it was like a gift to me. I have recently been contemplating the role of chance in my life, and when I mentioned this to Laura, she promised to send me a paper by Dr Albert Bandura, the most highly cited figure in contemporary psychology, on the role of chance in life, a paper which takes my own ideas much further. But that’s incidental to this piece.

As we chatted about the choices we make, Laura mentioned two of her own papers, and sent them to me as well. And, once more, she has had a profound effect on my thinking.

One paper was on age differences in preferences.

It’s obvious that the amount of time we have left to live shrinks as we age. What isn’t obvious is that we seem implicitly to take our shrinking survival years into account when we make choices, essentially making those choices over a shrinking time horizon. We don’t just think: oh well, that’s in the future, pretty much an indefinite time away (as we do when we’re young). When we’re much older, in particular, we’re conscious of the fact that our choices will play out over a much shorter time frame. And that shrinking time horizon changes our preferences. What we value much more highly, when the future isn’t an indefinite period, is things with emotional meaning in the present. But that makes total sense, as I think about it.

More surprising is that our negativity bias (our loss aversion) in early life changes to a positivity bias in middle life and late adulthood. Not that it needs to make total sense to me, of course – it would be true regardless of my views – but the conclusions resound all the more strongly for that. And remember: these conclusions in the paper are based on rigorous experiments in which large numbers of people of different ages were given choices to make, choices that would be able to have different conclusions drawn from them, and these were the conclusions that came through.

A thought that occurs to me is that perhaps that negativity-to-positivity change as we age is one of the reasons why the U-curve of happiness by age (see Chapter 11 in my Happiness book) starts to turn up after bottoming out. I don’t know which is cause and which is effect – but the two are consistent.

We focus more on gain than loss as we age​

The other paper was much more numerical, and took me longer to process. What fascinated me particularly was that it involved experiments associated with neuroimaging, that is, checking which parts of the brain are activated when choices of various kinds are considered and decisions are made. Again, the conclusion led away from conventional wisdom. It was that, as we age, we tend to consider monetary gain more importantly than monetary loss. In other words, we play down the impact of a loss, and play up the impact of a gain. This seems directly opposite to the loss aversion that we’ve known as a human characteristic. Apparently, though, it’s more a characteristic of younger humans, and not so much with older ones. When we have less time ahead of us, we’re thinking of thriving more than of surviving. That makes sense to me: at this age most of my surviving is behind me, and I look forward much more to thriving in the time I have left.

Anyway, put these two of Laura’s papers together, and they change what I have learned about human choices. Not only that: they have put me more at ease with myself, as I think about achieving positive outcomes rather than avoiding negative outcomes, and I think about emotional rather than material satisfaction. I feel somehow freer – and I hope this makes you feel that way too.

Don Ezra, now retired, is the former Co-Chairman of global consulting for Russell Investments..

Our investment thinking changes as we get older

For decades, it's been thought that investors focus more on limiting losses than making gains. New research suggests that as we age, the reverse may be true, which has significant implications for the investment industry.

www.firstlinks.com.au

 

[sptrawler]

OMG, but the narrative said all baby boomers a mega rich fat cats, why start changing the narrative, everyone believes it.

More than half of retirees and older workers have mortgage debt

More Australians are leaving work with mortgage debt. Should you raid your super to pay it down?

www.theage.com.au

An increasing number of Australians in their retirement years owe money on their mortgages thanks to increasing house prices in contrast to a generation ago when most people left the workforce debt-free.

In the 2019-20 financial year, the portion of homeowners aged 55 to 64 with mortgage debt reached 54 per cent, a significant jump from 23 per cent in 2002-03.

Australian Bureau of Statistics (ABS) figures show the age at which people retire is increasing, giving them longer in the workforce to pay off their debt. The average retirement age of those retiring in 2020 was 64, compared to just under 55 for those who retired in 2002.

They will have seen their variable mortgage interest and minimum repayments rise since the Reserve Bank of Australia started its rate-rising cycle in May last year, leaving them with less capacity to save for retirement, Professor ViforJ says.

“We may start to see more people [who satisfy a condition of release] drawing on their super to pay off their mortgage debt; though, it’s not showing up in a big way in the data yet,” she says. “That could be because the average super balance of many older Australians is still quite low.”

The portion of homeowners aged 55 to 64 with mortgage debt has grown markedly since Professor ViforJ first compiled the figures from Australian Bureau of Statistics (ABS) data for this masthead five years ago, and has been on the rise since 2002-03.

It was 54 per cent in 2019-20, the latest year for which the ABS data is available, from 47 per cent in 2015-16 and 23 per cent in 2002-03.

 

[divs4ever]

OMG, but the narrative said all baby boomers a mega rich fat cats, why start changing the narrative, everyone believes it.

More than half of retirees and older workers have mortgage debt

More Australians are leaving work with mortgage debt. Should you raid your super to pay it down?

www.theage.com.au

An increasing number of Australians in their retirement years owe money on their mortgages thanks to increasing house prices in contrast to a generation ago when most people left the workforce debt-free.

In the 2019-20 financial year, the portion of homeowners aged 55 to 64 with mortgage debt reached 54 per cent, a significant jump from 23 per cent in 2002-03.

Australian Bureau of Statistics (ABS) figures show the age at which people retire is increasing, giving them longer in the workforce to pay off their debt. The average retirement age of those retiring in 2020 was 64, compared to just under 55 for those who retired in 2002.

They will have seen their variable mortgage interest and minimum repayments rise since the Reserve Bank of Australia started its rate-rising cycle in May last year, leaving them with less capacity to save for retirement, Professor ViforJ says.

“We may start to see more people [who satisfy a condition of release] drawing on their super to pay off their mortgage debt; though, it’s not showing up in a big way in the data yet,” she says. “That could be because the average super balance of many older Australians is still quite low.”

The portion of homeowners aged 55 to 64 with mortgage debt has grown markedly since Professor ViforJ first compiled the figures from Australian Bureau of Statistics (ABS) data for this masthead five years ago, and has been on the rise since 2002-03.

It was 54 per cent in 2019-20, the latest year for which the ABS data is available, from 47 per cent in 2015-16 and 23 per cent in 2002-03.

divide to conquer is the only card they had left , it chilled my bones when one former Prime Minister ( i think it was the multi-millionaire one ) urged the retirees to take 'reverse mortgages to help fund their retirement

that was definitely the last time i would look to a senior politician for financial guidance

 

[sptrawler]

divide to conquer is the only card they had left , it chilled my bones when one former Prime Minister ( i think it was the multi-millionaire one ) urged the retirees to take 'reverse mortgages to help fund their retirement

that was definitely the last time i would look to a senior politician for financial guidance

I guess they have to change the narrative to not many baby boomers are mega rich, so that if they want to introduce an inheritance tax, they can say it doesn't affect many as there are only a few mega rich.
Oh dear how cynical you become when you age, I guess you have seen the wheel turn that many times, you know what's probably coming next.

Meanwhile the young hold their heads, to stop them exploding and wonder what the hell is happening to their lives.

 

[divs4ever]

rich and still Australian residents might be more accurate , the job they ( ATO ) did on Paul Hogan should have been enough warning to those with FAT bank-accounts ( to consider their options )

 

[divs4ever]

I guess they have to change the narrative to not many baby boomers are mega rich, so that if they want to introduce an inheritance tax, they can say it doesn't affect many as there are only a few mega rich.
Oh dear how cynical you become when you age, I guess you have seen the wheel turn that many times, you know what's probably coming next.

Meanwhile the young hold their heads, to stop them exploding and wonder what the hell is happening to their lives.

i can give you a booster course in cynical if you like ( free , as payment messes with my pension payments )

with politicians , ... i came , i saw and was disappointed