Superannuation, the ultimate government cash cow?

[PZ99]

Between now and 2035 the rules will have changed so many times that it's pointless even planning that far. The preservation age will probably go to whatever the pension age is anyway. Another reason to keep it at 65 or less

 

[HelloU]

Strangely I spend a lot of time planning and arranging my finances specifically so that i can pay my own way in the future and not be a burden on some other taxpayer .... I would rather they pay less tax and spend their money on their own families, rather than on me.

If the rules change, I change ....... that is called money managing.

I often wonder If I am in the minority (even on a share forum).

 

[PZ99]

I'm the same. But I'm not doing it for future taxpayers. I'm doing it because I don't feel comfortable with relying on the state for income. I'd rather fight my own battles.

Future taxpayers will never pay less tax. There's always a social program or three that have to be created and forcibly sponsored

 

[sptrawler]

PZ99 and HelloU, you are both right IMO, if you save and don't spend, you will have more money later.
Whether that is enough to be self funded, depends on a lot of things, most are out of your control.
When I was in my mid 20's with four kids and a non working wife, I thought $600,000 would be enough to have and retire comfortably, that was in the late 1970's early 1980's.
To achieve that was quite difficult back then, and fortunately I was always interested in finance, so I kept re adjusting the goal.
Now in 2018, I would say you need about 2 -2.5 million, to be comfortable and not have to ever rely on the State for income.This is working on a retirement of 60 - 65 years old.
So in 40 years the funds need IMO, have gone from $600k to say $2.4m that is about 4 times, which is about right if you use the general rule that everything doubles about every 10 years.
So our money will be devalued, and we will have share market crashes, and we will have periods of low growth etc.
But generally, if you are in your 40's you will probably need about 3.5-4m to retire comfortably at 60-65 and never require State assistance.
The rules change all the time, and the system isn't designed for you to pass on your wealth, within the next 10 -15 years my guess is you will have to use your super before you get any pension.
The system as it is heavily rewards, those who don't save, at the expense of those that do.
That is unaffordable and it will be discouraged in the near future, too many welfare people, and fewer jobs will lead to a tightening on welfare. IMO
The cashless society will bring about major changes.

 

[Smurf1976]

I often wonder If I am in the minority (even on a share forum).

I’m pretty much on the same page.

I’m not opposed to welfare for those who, for whatever reason, find themselves in difficult circumstances.

It certainly isn’t my intention to rely on it in retirement however.

 

[HelloU]

Big fan of taxing the behaviour you want to discourage, and subsidizing the behaviour you wish to encourage.

For Middle Australia
For the last 5 years ( and looking forwards ) the idea of being self supporting in retirement is being punished/capped -by both sides of government ............ and this is at the same time as we are living longer.

For Middle Australia
Simplistically, the message I get in 2018 is spend/enjoy your super at 60 (~20 years SGC) while you are fit, go onto the pension with some assets at 65/67 and the government will clean your house and mow your lawn whilst you go to the free doctor every day for all your free tests and scans - in taxpayer funded/subsidised transport if you like............... (tongue in cheek and not meant to offend, but it is what I see atm for an increasing demographic that is taxpayer funded - needing tax money paid in 2018, not tax money paid in 1977).

For Middle Australia
I am hoping that this message will change by 2035 to reduce the overall burden on taxpayers.

 

[luutzu]

Big fan of taxing the behaviour you want to discourage, and subsidizing the behaviour you wish to encourage.

For Middle Australia
For the last 5 years ( and looking forwards ) the idea of being self supporting in retirement is being punished/capped -by both sides of government ............ and this is at the same time as we are living longer.

For Middle Australia
Simplistically, the message I get in 2018 is spend/enjoy your super at 60 (~20 years SGC) while you are fit, go onto the pension with some assets at 65/67 and the government will clean your house and mow your lawn whilst you go to the free doctor every day for all your free tests and scans - in taxpayer funded/subsidised transport if you like............... (tongue in cheek and not meant to offend, but it is what I see atm for an increasing demographic that is taxpayer funded - needing tax money paid in 2018, not tax money paid in 1977).

For Middle Australia
I am hoping that this message will change by 2035 to reduce the overall burden on taxpayers.

Subsidise behaviour you want to encourage, tax those you wish to discourage is not the same as rewards and punishment.

You're not using the carrot and stick right if all you do is give money to those that already have it; take more money from those with little of it... then call it "incentive" towards "good" behaviour.

That's just bs talk.

I mean, you don't give kids more lollies because lollies so that they can work towards getting treats and lollies. Do you?

Say the state want to encourage people to do well; be educated and competent. It's idiotic to then give more fund to private schools so they can have a polo ring, a second swimming pool, upgrade their two year old computer lab... while cutting it from public schools where kids get to learn in demountables.

See kids, we want you to be rich and well educated... so if you or your parents are rich and you go to a rich school, you'll get more goodies. Else, well... you really should work on getting the right parent and get rich, then have more riches. Blame that on one or both of your parents for their life/partner choices.

 

[HelloU]

Big fan of taxing the behaviour you want to discourage, and subsidizing the behaviour you wish to encourage.

For Middle Australia
For the last 5 years ( and looking forwards ) the idea of being self supporting in retirement is being punished/capped -by both sides of government ............ and this is at the same time as we are living longer.

For Middle Australia
Simplistically, the message I get in 2018 is spend/enjoy your super at 60 (~20 years SGC) while you are fit, go onto the pension with some assets at 65/67 and the government will clean your house and mow your lawn whilst you go to the free doctor every day for all your free tests and scans - in taxpayer funded/subsidised transport if you like............... (tongue in cheek and not meant to offend, but it is what I see atm for an increasing demographic that is taxpayer funded - needing tax money paid in 2018, not tax money paid in 1977).

For Middle Australia
I am hoping that this message will change by 2035 to reduce the overall burden on taxpayers.

If Middle Australia all end up on the government pension in 2035 then the poor old taxpayer will have to work the first 3 days of the week for tax money, instead of the first 2 days per week they have to work now to pay for social welfare.

Imagine having to explain to a worker that their first 3 work days of the 5 day week just goes on tax for welfare........

 

[PZ99]

"Social welfare" overall maybe 2 out of 5 days per week of expenditure.

The age pension is less than a third of that. I don't believe it'll ever be akin to 3 days a week.

It's not even been projected to increase as a % of GDP. NDIS might be different.

 

[HelloU]

https://www.smh.com.au/politics/fed...-too-much-from-taxpayers-20160301-gn7e6g.html

If everyone is on the pension/welfare then there is nobody left to be the taxpayers ..........

 

[PZ99]

Sorry, I stopped reading when I got to "means testing the family home"

That article is more political than economic. If the age pension blows out as that predicts, the Govt will either increase the super preservation age or limit your drawdown to an annuity instead of a lump sum.

Or they might tax large withdrawals.

Threatening the family home is political oblivion. IMO

 

[HelloU]

Logically correct to me ....... if someone is sitting at home all day then they may as well have a nice view to look at. Seems pointless for a person to have a nice view if they have to go out to work each day and cannot enjoy it.

 

[luutzu]

If Middle Australia all end up on the government pension in 2035 then the poor old taxpayer will have to work the first 3 days of the week for tax money, instead of the first 2 days per week they have to work now to pay for social welfare.

Imagine having to explain to a worker that their first 3 work days of the 5 day week just goes on tax for welfare........

Where did you get those stats from?

The average tax payer are now paying 2 days of their 5 day work week on (other people's) social welfare?

So 40% of tax dollars are being spent on welfare? Welfare as in CentreLink, not corporate and the likes?

I'm definitely sure the figures aren't correct.

 

[luutzu]

Sorry, I stopped reading when I got to "means testing the family home"

That article is more political than economic. If the age pension blows out as that predicts, the Govt will either increase the super preservation age or limit your drawdown to an annuity instead of a lump sum.

Or they might tax large withdrawals.

Threatening the family home is political oblivion. IMO

That's how it's done.

Make up some numbers, widen the definition of "pension and welfare" to include everything the gov't "give" back. Then conclude that it's unfair and unaffordable.

The conclusion, if we just assume the definition they're using is accurate, pain no more than the mere fact that taxpayers' money are being spent on social welfare programmes. You know, looking after our fellow citizens, the old, the sick, the injured veterans, their widows and orphans.

A "large" percentage of spending going towards certain spent category does not make it "big" and "unaffordable". It's fraction - taxpayers are still paying the same tax are they not? Should those tax dollars be spent on social welfare, or should it be spent on corporate tax cuts; military; surveillance; subsidies?

Fairfax, liberal media my azz.

 

[HelloU]

Totally agree,
too much tax taken and too much spent on welfare for peeps with plenty of assets.

Transition to a cashless society will no doubt contribute more to the tax take as the 'cash economy' (black economy) reduces. Bring it on I say.

 

[Wysiwyg]

For Middle Australia
For the last 5 years ( and looking forwards ) the idea of being self supporting in retirement is being punished/capped -by both sides of government ............ and this is at the same time as we are living longer.

Lost income tax revenue from older workers (mostly in their highest earning years) that used the tax advantaged retirement saving path. The government needs funds now too, hence the cap.

Thoughts?

 

[HelloU]

Lost income tax revenue from older workers (mostly in their highest earning years) that used the tax advantaged retirement saving path. The government needs funds now too, hence the cap.

Thoughts?

totally get that point and see it as a thing .... and that is another issue that does not get explained - the underlying costs.

Lots of things I do not really get about super/tax/welfare:
Why do we have totally different welfare/taxation rules when a person reaches a particular age.
If a person is not able to work at 35 years of age I do not totally understand why should they get more/less welfare than someone under the same circumstances at 65 years of age who is not able to work? (do they eat more/less food, pay more/less rent, use more/less electricity etc),
If I sit at home all day and my sole income is $30K from BHP dividends, how come I am taxed differently at age 30 than at age 70 on the dividend,
Why is milk and education is not subject to gst,
How come a shelf-stacker who works for a charity can get and extra $17K paid to them tax free (on top of the $19K tax free) when a supermarket shelf-stacker cannot do the same thing.
But I digress ....

 

[willy1111]

Maybe a better/fairer system would be that earnings on super balances once preservation/access age is reached reverts to individual marginal tax rates.

Earnings during accumulation phase left to be taxed as they are.

Withdrawal of capital untaxed as it is your money.

 

[sptrawler]

Sorry, I stopped reading when I got to "means testing the family home"

That article is more political than economic. If the age pension blows out as that predicts, the Govt will either increase the super preservation age or limit your drawdown to an annuity instead of a lump sum.

Or they might tax large withdrawals.

Threatening the family home is political oblivion. IMO

I think you are pretty well on the ball, they can increase the preservation age in line with pension age, they can up the tax on the accumulation account, they can introduce a tax on the pension drawdown.
They can limit the drawdown on your taxable, but difficult to do so on your tax free.
The family home will eventually be hit, when the money runs out from retirees with cash, untill then it isn't a fight worth fighting.

There will be a lot of self funded pensioners gearing up for silly Billy IMO.
Some grandparents will be taking kids, on the trip of their lives, they would rather the family enjoy it than the Government take it to give it to Muppets.IMO

 

[sptrawler]

I suppose an easy answer to all your questions is.
Why save and not have holiday's, or flip new cars to save $800k and get no pension and earn about $35k of income.
When you could have a great time and spend and all your money, then have $300k in super and get $35k in pension.
It really doesn't make sense.
I'm probably missing something, maybe the great feeling of doing without for the greater good. Then being told your just a selfish fat cat. What a hoot, what a flicked up system.
Is there any wonder we are going down the tube. Lol