Superannuation, the ultimate government cash cow?

[Smurf1976]

Whilst I did not agree with some of Howard's ideas and policies, he was undoubtedly a far more respectable, honest and overall reasonable Prime Minister than Tony Abbott will ever be.

Part of the difference comes down to personal attitude. Howard seemed willing to accept that he may not be right, and that the other side of the debate warranted at least listening to. Not so with "my way or the highway" Tony Abbott.

Back to superannuation, I have never contributed one cent voluntarily. The reason is simple, I just don't trust government not to meddle with this already highly regulated investment vehicle in some way. There's just no point ending up with enough money to retire at age 60 then having the government decide that you can't access it until you're on your death bed.

Whilst I have taken steps to ensure that the employer contributions are invested wisely, overall I treat superannuation as a bonus if I get it rather than something that can be relied upon in retirement. I just don't trust them (governments) not to change the rules in some way to the detriment of most.

 

[k.smith]

I did watch that and didn't find it a criticism of the current compulsory Super as much as advice that we need to adjust savings programs according to the ever changing demographics of people living longer and longer.
As I understood what he was saying, he was recommending that a further 'insurance scheme' should be put in place to cover the possibility that people might live into their 90's and beyond.
He made complete sense to me, but I imagine politically it would be a hard sell....''

It perhaps worthwhile to post a link to the transcript of Mr. Keating's interview on Lateline.

http://www.abc.net.au/lateline/content/2014/s4001033.htm

He also spoke about "shelter" wealth....

''....Really? I wasn't living here when compulsory super was introduced so I've always assumed it was introduced with the aim that - over time - it would provide an alternative to the age pension. Even at that time demographers would have foreseen the blow out which inevitably would occur as more retirees came into the system with fewer workers supporting them....''

I think sptrawler is right.

http://www.treasury.gov.au/Policy-Topics/SuperannuationAndRetirement/supercharter/Discussion-Paper

''...Australia has a three pillar approach to the provision of retirement incomes, comprising the means tested and publicly funded Age Pension, compulsory private savings through the Superannuation Guarantee arrangements, and voluntary private savings supported by taxation concessions.
The Age Pension remains the main support in retirement for those who are not able to save a sufficient amount during their working life. Superannuation was designed to reward and support all Australians to save for a comfortable, secure and financially adequate retirement....''

......How do you define "a struggle"?

eg A pensioner couple receives nearly twice as much as a single pensioner, but the single pensioner has the same council rates, insurance, phone, electricity etc. Who is struggling? Both kinds of households? Just the single pensioner?.....'

This...

http://www.humanservices.gov.au/cus...ink/age-pension/payment-rates-for-age-pension

Single Pension = $842.80 per fortnight ($421.40 per week)

Couple = $1270.60 per fortnight - just 66% more ( $635.30 per week)

$421.40 a week or $60.20 per day.
Or in recent terminology...
http://www.smh.com.au/federal-polit...e-hockey-defends-7-gp-fee-20140515-zrdb6.html

$60.20 per day is the equivalent of the cost of 2.7 packets of cigarettes a day.

......
It doesn't seem reasonable to me that compulsory super would have been introduced just to make life 'better' in retirement. Surely that should be up to individuals?
eg if they want to go for extended overseas holidays, update their car every year etc, surely it shouldn't be at the expense of the taxpayer and they should be prepared to save separately for that sort of lifestyle.....''

What percentage of a basic wage would it take to save for a self-funded retirement?
The less income a person earns, the higher percentage goes in basic living essentials, and the less chance there is that there will be surplus to save, isn't that the reason we got compulsory super ? It is the best chance of savings that many will get, but for many, unless there is a pension, it's will never be enough.
And compulsory super's stated aim is to provide for a "comfortable, secure and financially adequate retirement" imo that rules out both excessive retirement pensions by the multimillionaire depositors, and taking out lump sums for cars or holidays.
Home mortgage, perhaps.

 

[k.smith]

.....Where do you expect the money to come from to fund full age pensions, if not from compulsory Super, eventually?
From the same taxpayer who funds Newstart, Youth Allowance, Disability Support Pension, Carer Pension, Sickness Allowance, Family Tax Benefits etc etc etc?
There will simply not be enough of them to balance the numbers of retirees with the baby boomers living as long as they probably will....

Hopefully,some pressure will be alleviated by more people who just keep working?
According to the ABS, 25% of people between 60-69 are still working, and some super funds online are saying a lot more expect to work into their seventies. Perhaps there will also need to be a shift in the distribution of wealth?
http://www.abs.gov.au/ausstats/abs@...ummary&prodno=6554.0&issue=2011–12&num=&view=

...And if you don't like the fees in the public super funds, get financially literate and run your own fund....

Wouldn't that depend on how much you have in super?
From my experience, the cost of running a SMSF is $2000 p/a +, and imo, small balance super would not support such a fee.
Julia, everyone can go to the "university of finance", but that doesn't mean that they will qualify with a diploma...people are all different

 

[Judd]

Snip*

And I would support a tax on lump sum withdrawals.

Snip*

A thought crossed my mind, obviously as I wouldn't be typing this, if such an arrangements were implemented there would need to be some clear way to distinguish between funds placed into superannuation on an after-tax basis and those which weren't as well as, maybe, earnings on those funds. Could be messy. Nevertheless worthy for consideration.

 

[Julia]

With a bit of luck all super won't be available untill pension age and no pension is available untill all your super is exhausted.
That sounds fair for everyone.

How would that work? If no government pension is available until ALL your Super is exhausted, where is one's income in retirement going to come from when the Super balance is too low to generate a return that is enough to live on? Or are you actually suggesting people should be forced to use up all their capital before having any access to government pension, regardless of their age or circumstance?

The bigger issue to me is how assets can be packaged to collect the age pension. Because the principle residence is exempt from the assets test, at your preservation age you can draw money from super tax-free and structure your assets in a way that could allow you to live in a million dollar plus home in retirement and still collect either a full or part pension payment. Your nearest financial planner can tell you all about it and many specialize in this area. The whole issue of millionaire property owners collecting a government pension is a vexed one that the government will need to look at eventually. Super savings should provide a retirement income stream and not be used as vehicle to manipulate finances to collect the age pension.

+100.

http://www.treasury.gov.au/Policy-Topics/SuperannuationAndRetirement/supercharter/Discussion-Paper

''...Australia has a three pillar approach to the provision of retirement incomes, comprising the means tested and publicly funded Age Pension, compulsory private savings through the Superannuation Guarantee arrangements, and voluntary private savings supported by taxation concessions.
The Age Pension remains the main support in retirement for those who are not able to save a sufficient amount during their working life. Superannuation was designed to reward and support all Australians to save for a comfortable, secure and financially adequate retirement....''

Um, you post a link to what appears to be a Treasury paper, including what I'd assumed was a quote from Treasury, although it sounded more like what a politician would say than the way Treasury articulates.
Sure enough, your quote is from a foreword to the discussion paper from none other than Mr Bill Shorten.
Given Mr Shorten doesn't believe we have any sort of structural problem and there is no need to address the fact that Australia has the highest spending growth projection in the world, I'm less than disposed to take his word for anything to do with Super or, for that matter, savings in general.

Single Pension = $842.80 per fortnight ($421.40 per week)

Couple = $1270.60 per fortnight - just 66% more ( $635.30 per week)

OK, your definition of a welfare payment that is a struggle is the above. I wonder how you'd define the Newstart payment of around $250 p.w.? Let's remember that most aged pensioners will at least own their own home and car. In contrast, a large number of people who lose their jobs - or can't find one - will be renting and have minimal savings. Good luck with finding rental accommodation in most areas where the jobs exist for $250 p.w., let alone provide yourself with food, transport etc etc.

That's a dilemma for governments. Already there are people who are disinclined to look for a job. The government is trying to address this with its harsh new measures. Perhaps it will work. I don't know.
Perhaps it's worth a try, or work for the dole, even just to get people to understand the ethic of a structured day and putting in the effort of making a contribution, as opposed to sitting at home playing with the studs in their noses.

All welfare obviously needs to be a safety net, not a long term viable way to live imo.

What percentage of a basic wage would it take to save for a self-funded retirement?

OK, let's take a very rough look at this:

Average wage $1500 p.w. ergo $78,000 p.a.
Let's round it down to just $70,000 and, even more ridiculously conservatively, suggest it doesn't rise during a working life of age 25 to 65, forty years.
Let's even assume it earns nothing and is not compounded, neither of which would actually happen.

At 15% compulsory super, again rounding down for simplicity, that would be $400,000.

So, obviously above is almost meaningless because it doesn't represent a real situation where the 15% p.a. amount would be earning a return, and compounding would have huge effect.

I'm not suggesting $400K would be enough for self funded retirement, but I'm guessing the resulting amount from a fully calculated invested, compounded amount might be. Obviously inflation would need to be taken into account also, as would the reality that no one is going to be staying on the same salary all their working lives.

So perhaps not as difficult as you might think.

The less income a person earns, the higher percentage goes in basic living essentials, and the less chance there is that there will be surplus to save,

Yes, agree. But all around us we see evidence of people on high incomes who haven't bothered to save, and others on much less who have set different priorities and have saved substantial amounts. Also, some folk who have sought financial literacy and learned how not to lose money. Seems to me it's often about attitude and goals than just dollar amounts.

Or I might be entirely misguided, and it's all about luck, nothing to do with effort.

Hopefully,some pressure will be alleviated by more people who just keep working?
According to the ABS, 25% of people between 60-69 are still working, and some super funds online are saying a lot more expect to work into their seventies. Perhaps there will also need to be a shift in the distribution of wealth?

Well, I don't know about you, but I certainly wouldn't want to be working until I was 70. And it's just not going to be feasible for a lot of people engaged in hard physical labour.

Before that happens, I'd like to see some of the excessively generous treatment of Super curtailed somewhat.
We have already discussed the unfairness of people living in exempt multi million dollar homes and receiving the full pension. Also surely there should be a limit to the wealth creation being engaged in quite legally by people who are very well off and continuing to receive tax concessions in Super with accounts of $10M and $20M. Just seems to me extremely unfair that tax is being applied to young people on the average wage, trying to get together enough for deposit on their first home, so that that tax can continue supporting the full age pension for some wealthy widow.

Wouldn't that depend on how much you have in super?
From my experience, the cost of running a SMSF is $2000 p/a +, and imo, small balance super would not support such a fee.

Accounting/audit costs vary enormously. Some of the big glossy firms will charge $6000 for what a good suburban accountant with SMSF experience will do for $1200.
Anyone who is accepting an arrangement where fees are charged on % of assets basis is being suckered imo, especially as the amount becomes higher.
The fee should be based on the number of hours of work required to complete the tax return. If there are few transactions, it's pretty hard to see any justification for $2000+.

I don't know what fees public super funds charge, even if you only had $200K to start with, a fee of, say, $1200, would only represent about 0.06%. Is that actually more than you'd pay an often poorly performing public fund?

Julia, everyone can go to the "university of finance", but that doesn't mean that they will qualify with a diploma...people are all different

Totally agree. And there will be people who simply don't have the capacity to go to your 'university of finance' in the first place. There will always be a safety net for them.

I'm not talking about people like that. I've always felt strongly that we need to recognise the differences in individual capacities, whether derived from genes, childhood modelling, or life circumstances.
I'm talking about the well educated, highly intelligent people who just don't think about the need to save, the folk who regard income not required for non-discretionary payments like insurances, rates, etc., as money for a holiday, new car etc.

OK, fine, we all have our own priorities. I'm just a bit sick of some of these people making remarks like
"we couldn't be expected to have enough in retirement because compulsory super only came in in the last years of our working lives". Well, duh! Perhaps just give a bit of thought to whether you want to be restricted to income from only what will inevitably be a dwindling age pension as the numbers seeking it more and more blow out in relation to those workers who are going to be paying for it.

 

[sptrawler]

How would that work? If no government pension is available until ALL your Super is exhausted, where is one's income in retirement going to come from when the Super balance is too low to generate a return that is enough to live on? Or are you actually suggesting people should be forced to use up all their capital before having any access to government pension, regardless of their age or circumstance?
.

The quote was tonque in cheek, poor attempt at sarcasm after build up of frustration. Appologies

 

[k.smith]

.....Um, you post a link to what appears to be a Treasury paper, including what I'd assumed was a quote from Treasury, although it sounded more like what a politician would say than the way Treasury articulates.
Sure enough, your quote is from a foreword to the discussion paper from none other than Mr Bill Shorten.
Given Mr Shorten doesn't believe we have any sort of structural problem and there is no need to address the fact that Australia has the highest spending growth projection in the world, I'm less than disposed to take his word for anything to do with Super or, for that matter, savings in general....

Ok...perhaps you might be more inclined to read it from an Australian Government document released 12 May 2014

http://www.guidesacts.fahcsia.gov.a...guide-4.8/ssguide-4.8.1/ssguide-4.8.1.10.html

''..... Purpose of superannuation
The primary purpose of a superannuation scheme is to provide its members with financial resources and other benefits during their retirement............Extended superannuation coverage, due to award provisions and the SGC legislation, has increased the level of retirement benefits available to Australians. This, together with voluntary savings and the age pension, will fund higher living standards during retirement....''

 

[Julia]

The quote was tonque in cheek, poor attempt at sarcasm after build up of frustration. Appologies

No apology required, sp. Just thought I might have been missing something in what you were meaning. Totally understand your frustration.

 

[k.smith]

.....OK, let's take a very rough look at this:

Average wage $1500 p.w. ergo $78,000 p.a.
Let's round it down to just $70,000 and, even more ridiculously conservatively, suggest it doesn't rise during a working life of age 25 to 65, forty years.
Let's even assume it earns nothing and is not compounded, neither of which would actually happen.

At 15% compulsory super, again rounding down for simplicity, that would be $400,000.

So, obviously above is almost meaningless because it doesn't represent a real situation where the 15% p.a. amount would be earning a return, and compounding would have huge effect.

I'm not suggesting $400K would be enough for self funded retirement, but I'm guessing the resulting amount from a fully calculated invested, compounded amount might be. Obviously inflation would need to be taken into account also, as would the reality that no one is going to be staying on the same salary all their working lives.

So perhaps not as difficult as you might think.....

Perhaps it is more difficult than you think....

My question was "....What percentage of a basic wage would it take to save for retirement?

Your example was for an amount of $78,000.
You are talking about an average wage...
if 5 wage earners receive $20k, $30k, $40k, $50k and $600k, the average wage is $148k

The stats suggest that more than 80% of wage earners receive LESS than $78,000. I know the stats are from 2010-2011, but I don't think wages have increased that much in the last three years?

http://www.abs.gov.au/ausstats/abs@.nsf/mf/5673.0.55.003 see Table 2.
PERCENTAGE DISTRIBUTION OF EARNERS, SELECTED WAGES AND SALARIES INCOME RANGES, AUSTRALIA, 2010-11



$0 - $15,600 18.1%

$15,600 - $31, 200 17.2%

$31,200 - $52,000 25.4%

$52,000 - $78,000 20.9%

$78,000 + 18.5%


Does anyone have any thoughts about the aged 55+ transition period?
Is it really a good idea to draw down at such a "young" age?

 

[sptrawler]

Perhaps it is more difficult than you think....

My question was "....What percentage of a basic wage would it take to save for retirement?

Your example was for an amount of $78,000.
You are talking about an average wage...
if 5 wage earners receive $20k, $30k, $40k, $50k and $600k, the average wage is $148k

The stats suggest that more than 80% of wage earners receive LESS than $78,000. I know the stats are from 2010-2011, but I don't think wages have increased that much in the last three years?

http://www.abs.gov.au/ausstats/abs@.nsf/mf/5673.0.55.003 see Table 2.
PERCENTAGE DISTRIBUTION OF EARNERS, SELECTED WAGES AND SALARIES INCOME RANGES, AUSTRALIA, 2010-11



$0 - $15,600 18.1%

$15,600 - $31, 200 17.2%

$31,200 - $52,000 25.4%

$52,000 - $78,000 20.9%

$78,000 + 18.5%


Does anyone have any thoughts about the aged 55+ transition period?
Is it really a good idea to draw down at such a "young" age?

It is all a very difficult and personal journey.
I was brought up in a family with four siblings, my parents always found it difficult to make ends meet, this caused a lot of arguement and physical conflict.
This in turn motivated me, to make sure I was never in a financial situation, that could cause the same issues in my family life.
I made it my personal goal to save in my early years, pay cash or don't buy it and invest money so it makes money.
I left school at 15, did an apprenticeship, had four children before I was thirty and always worked for wages.
I retired at 55 due to health issues and am self funded, I don't expect to ever be on the age pension.
So in a nutshell k.smith, if you work towards it and plan for it from an early age, 55 retirement is possible. There was no minimum or maximum put away, just minimal wastage.
I would have prefered to have worked to 60, from a personal perspective.

 

[Judd]

It is all a very difficult and personal journey.
I was brought up in a family with four siblings, my parents always found it difficult to make ends meet, this caused a lot of arguement and physical conflict.
This in turn motivated me, to make sure I was never in a financial situation, that could cause the same issues in my family life.
I made it my personal goal to save in my early years, pay cash or don't buy it and invest money so it makes money.
I left school at 15, did an apprenticeship, had four children before I was thirty and always worked for wages.
I retired at 55 due to health issues and am self funded, I don't expect to ever be on the age pension.
So in a nutshell k.smith, if you work towards it and plan for it from an early age, 55 retirement is possible. There was no minimum or maximum put away, just minimal wastage.
I would have prefered to have worked to 60, from a personal perspective.

Yep. Took me a few years to realise it was more important to focus on what I can do in regard to my fiances rather than looking over the fence at others. So what if others have "spent their life boozing gambling or not even work ever!" I've probably have a better standard of living than those individuals and can take some personal pride in my achievements.

 

[FxTrader]

Does anyone have any thoughts about the aged 55+ transition period?
Is it really a good idea to draw down at such a "young" age?

This only applies if you are born before 1 July 1960 and retire. Even then from a tax perspective it's much more advantageous to delay retirement until age 60, or until age 65+ if you're also planning to collect an age pension.

The challenge though for many in this age group will be retaining or securing work and maintaining an adequate health condition to work. Having experienced ageism when seeking employment myself, I can sympathize with the dilemma many older workers face trying to maintain and gain employment. Retirement is forced on many due to the reluctance of employers to hire mature age workers, whatever their experience level, due to loss of previous employment.

It's just fanciful nonsense that a significant number of people can or will work to age 70, the stats on this are clear. The current government knows this but has crafted a policy based on this fiction to cut the cost of providing the age pension. A more creative, thoughtful and researched response is required to deal with the financial needs of an ageing population.

 

[pixel]

This only applies if you are born before 1 July 1960 and retire. Even then from a tax perspective it's much more advantageous to delay retirement until age 60, or until age 65+ if you're also planning to collect an age pension.

The challenge though for many in this age group will be retaining or securing work and maintaining an adequate health condition to work. Having experienced ageism when seeking employment myself, I can sympathize with the dilemma many older workers face trying to maintain and gain employment. Retirement is forced on many due to the reluctance of employers to hire mature age workers, whatever their experience level, due to loss of previous employment.

It's just fanciful nonsense that a significant number of people can or will work to age 70, the stats on this are clear. The current government knows this but has crafted a policy based on this fiction to cut the cost of providing the age pension. A more creative, thoughtful and researched response is required to deal with the financial needs of an ageing population.

+100% and "Amen to that!"
Ageism has been in place for decades. The only alternative I had at 55: Going it alone, as a "Sole Trader".

 

[sptrawler]

The current government knows this but has crafted a policy based on this fiction to cut the cost of providing the age pension. A more creative, thoughtful and researched response is required to deal with the financial needs of an ageing population.

As did the previous Government when lifting the retirement age to 67, lets keep the discussion balanced.

But I agree 100% with your sentiments.
The rhetoric is probably aimed more, at keeping the aged workers focusing on holding their current jobs untill 70. Rather than considering early retirement or job swapping.

 

[sydboy007]

http://www.abs.gov.au/ausstats/abs@.nsf/mf/5673.0.55.003 see Table 2.
PERCENTAGE DISTRIBUTION OF EARNERS, SELECTED WAGES AND SALARIES INCOME RANGES, AUSTRALIA, 2010-11



$0 - $15,600 18.1%

$15,600 - $31, 200 17.2%

$31,200 - $52,000 25.4%

$52,000 - $78,000 20.9%

$78,000 + 18.5%


Does anyone have any thoughts about the aged 55+ transition period?
Is it really a good idea to draw down at such a "young" age?

The much bigger issue is the cost of shelter these days compared to 20+ years ago. Rents chew up a greater share of incomes than they did in the past, and mortgages are generally quite unaffordable. In this scenario it's quite difficult to have a lot of surplus income to save, and with the precarious nature of employment today, I'd say anyone salary sacrificing into super better have a nut equivalent to 6 months after tax income or they could be in trouble pretty quickly.

When I compare buying my house in Sydney in 1997, the $300K purchase was roughly 3.5 times my income. Now it would be roughly 9 times.

http://www.macrobusiness.com.au/2014/05/what-we-earn-is-irrelevant-when-we-pay-so-much/

Problem? It is if you’re trying to buy into the housing market. Take a modest house of say $400,000 (very modest depending on location). A worker on $50,000 – and these represent nearly two thirds of all workers remember – is facing a price multiple which is 8 times their gross pre-tax income. Basically, two thirds of us are stuffed in terms of affording even a modest $400,000 property if we weren’t already in the market. A more reasonable price multiple of say 5 times income would require an income of $80,000 per annum or more. But there are less than 15% of Australians who fit this category.

But even based on combined household incomes, a third of all households earn less than $52,000 per annum. Another 14% to 15% earn between $52,000 and $78,000 and another 11% or 12% earn between $78,000 and $104,000. A reasonably healthy 30% of all households bring in a combined $104,000 per annum or more, but seven in ten bring in less than that.

Taking our modest $400,000 home again, and roughly half of all household incomes fall short of the $80,000 mark required for a price-to-income multiple of five. For one in three of every households, their combined income means a price to income multiple of eight times. They are pretty much stuffed, still.

Personal income profiles of the 25-34 year old age group are pretty much in line with the Australia wide picture. More than half earn less than $52,000 and roughly eight in ten earn less than $78,000 per annum, which means eight in ten of this age group – who are at the peak of their family formation potential – would be faced with a price multiple of more than 5 times incomes on a $400,000 property, and more than half would be faced with a price multiple which is eight times their income, or more.

None of this is great news. For developers trying to provide affordable new housing in new greenfield estates in urban fringe locations, the reality of these income profiles can’t be escaped. I had the privilege of visiting one such estate in south east Queensland recently and what I saw was absolutely first class product at very good entry level prices in a very well designed environment. No ‘McMansions’ here – just quality new detached three and four bedroom homes, on small lots, priced from around $350,000 – and in some cases less.

But even at $350,000, only around 15% or so of the target 25 to 34 year old demographic could afford to get in with a price multiple of less than 5 times an individual’s income. That proportion would rise taking into account combined incomes for this age group, but it won’t rise beyond around a quarter or a third. The reality is that more than half this age group would find an entry level $350,000 home would be six times their combined incomes or more. It would be tough going.

 

[pixel]

The much bigger issue is the cost of shelter these days compared to 20+ years ago. Rents chew up a greater share of incomes than they did in the past,

Spot-on, Sydboy;
but that also applies to Aged-Pensioners - the older ones of whom won't even have had a chance to accumulate any meaningful Superfund "nest egg". In spite of having worked all their lives, paying taxes under the premise that would entitle them to a pension, they're now lumped into one bag with dole bludgers, drunks, and reckless spenders that should've saved for their future, but didn't.
In light of the above, I find it utterly offensive if the right-wingers now tar everyone with the same brush.
Ms Rich Bitch doesn't miss a meal if the GST for caviar goes up to 15% or also applies to bread and milk. But what about the 80-year old widow in a Homeswest flat, who stands to lose concessions for water and power rates, on top of unit charges going up?

 

[sptrawler]

The much bigger issue is the cost of shelter these days compared to 20+ years ago. Rents chew up a greater share of incomes than they did in the past, and mortgages are generally quite unaffordable. .

Agree Syd, I hope they do something to deflate the price of housing, as opposed to infate away the issue.

If they chose the later, it will make it even more difficult, for those with little earning capacity or with no ability to bargain for higher wages.

 

[FxTrader]

The much bigger issue is the cost of shelter these days compared to 20+ years ago. Rents chew up a greater share of incomes than they did in the past, and mortgages are generally quite unaffordable. In this scenario it's quite difficult to have a lot of surplus income to save, and with the precarious nature of employment today, I'd say anyone salary sacrificing into super better have a nut equivalent to 6 months after tax income or they could be in trouble pretty quickly.

Not wanting to stray to far of topic here, but expect housing afforadability to only worsen if ABS projections for population growth come true - http://www.abs.gov.au/AUSSTATS/abs@.nsf/mediareleasesbyReleaseDate/7DB4DD841EA3A2A5CA2574B9001E26F6?OpenDocument.

Compulsory super is only compulsory for employers, it should propabaly be so for individuals as well.

 

[k.smith]

Perhaps it is more difficult than you think....

My question was "....What percentage of a basic wage would it take to save for retirement?

Your example was for an amount of $78,000.
You are talking about an average wage...
if 5 wage earners receive $20k, $30k, $40k, $50k and $600k, the average wage is $148k

The stats suggest that more than 80% of wage earners receive LESS than $78,000. I know the stats are from 2010-2011, but I don't think wages have increased that much in the last three years?

http://www.abs.gov.au/ausstats/abs@.nsf/mf/5673.0.55.003 see Table 2.
PERCENTAGE DISTRIBUTION OF EARNERS, SELECTED WAGES AND SALARIES INCOME RANGES, AUSTRALIA, 2010-11



$0 - $15,600 18.1%

$15,600 - $31, 200 17.2%

$31,200 - $52,000 25.4%

$52,000 - $78,000 20.9%

$78,000 + 18.5%

The much bigger issue is the cost of shelter these days compared to 20+ years ago. Rents chew up a greater share of incomes than they did in the past, and mortgages are generally quite unaffordable. In this scenario it's quite difficult to have a lot of surplus income to save, and with the precarious nature of employment today, I'd say anyone salary sacrificing into super better have a nut equivalent to 6 months after tax income or they could be in trouble pretty quickly.

When I compare buying my house in Sydney in 1997, the $300K purchase was roughly 3.5 times my income. Now it would be roughly 9 times.......

Your post sydboy007 goes some way into illustrating the problems there are for people to save.
So much of the income of so many is required for just basic living. To put a roof over one's head, whether you buy it or rent it eats into a large percentage of even a duel income family on $104k.
What about the cost of groceries? Even the most basic of foods, a 3kg bag of "ordinary" unwashed potatoes cost $6.49 in our big name supermarket this morning ! Then there is gas and electricity, rates, insurance... do the sums, add up the list !
( and no, I am NOT whining....we still work, we save $$ by chopping wood and growing veggies, and enjoy doing that! but that is a lifestyle choice that most people either do not have the opportunity or the know how to do )

The possibility of 60.7% (that is those earning less than $52k) of people putting that bit extra away and saving enough for retirement imo is remote. So there will have to be a safety net...the aged pension. We will have to reach a consensus on how that will be funded. The high income earners say they pay too much already and the low income earners complain that they will not have enough food on the table. I think that the facts are that low income earners will have a very bad time of it, and I think you do not have to be Einstein to figure that the social consequences will be detrimental to our society.

In time, with increased compulsory super contributions over a long period of perhaps more than 40 years of one's working life, I think the super system may work to provide retirement income for most. And that is a great thing. In the meantime, we have a system where all wage earners pay compulsory super, and some are financially able to contribute extra. Me too ! But in such times as where the government is looking to elk out more from the basic living costs of those who can least afford it, it has surely got to be time to curtail the massive tax concessions that occur in the super system at the high end and put a limit to tax free super withdrawals.

 

[sptrawler]

The possibility of 60.7% (that is those earning less than $52k) of people putting that bit extra away and saving enough for retirement imo is remote. So there will have to be a safety net...the aged pension. We will have to reach a consensus on how that will be funded. The high income earners say they pay too much already and the low income earners complain that they will not have enough food on the table. I think that the facts are that low income earners will have a very bad time of it, and I think you do not have to be Einstein to figure that the social consequences will be detrimental to our society.

In time, with increased compulsory super contributions over a long period of perhaps more than 40 years of one's working life, I think the super system may work to provide retirement income for most. And that is a great thing. In the meantime, we have a system where all wage earners pay compulsory super, and some are financially able to contribute extra. Me too ! But in such times as where the government is looking to elk out more from the basic living costs of those who can least afford it, it has surely got to be time to curtail the massive tax concessions that occur in the super system at the high end and put a limit to tax free super withdrawals.

From what information I can gather, from people who are retired in my circle of aquiantaces.

The retirees that are doing it hard are those that don't own their own home, this is compounded if they smoke and drink.

Those that own there own homes are finding the pension adequate, and if they don't smoke or drink regularily , can afford small holidays.

Super was designed so workers could put money away to enhance their retirement. Once that super balance reached a certain level, their pension would be reduced gradually upto a point that it was felt you didn't require any pension.

So the real issue is, the people who reach retirement age and don't own there home, they are at the mercy of the rental market and still want a reasonable quality of life.
That is very expensive to fund from consolidated revenue.

I think all these other side issues of people spending their 'super' to get the pension, is a smoke screen to hide the real issue.
It has nothing to do with super.IMO