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Effect on incomes from the Govt and other measures

RooFlyer

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This caught my attention, as I'm feeling the pain:

Boomer incomes fall as younger generations enjoy benefits surge (Probably paywalled - try googling the headline to get the whole story)

Baby boomers are alone among the generations to suffer a fall in income through the COVID-19 crisis, according to Commonwealth Bank analysis of three million households who bank with the lender.

The unprecedented level of government support in response to COVID-19 and the massive take-up of the early access to super schemes boosted average household income overall by 4.2 per cent over the year to the June quarter, the research shows.
...
Salary income dropped 6.6 per cent on average as the health crisis put hundreds of thousands of Australians out of work. But a 54 per cent surge in average incomes from government benefits versus a year earlier, and a 64 per cent jump in “investment income” — which captures payments from the first withdrawal of up to $10,000 from super under the special early-release scheme — has led to what CBA senior economist Kristina Clifton called a “positive income shock”.
...
While the average income among the three million households has climbed, a breakdown by generation reveals that boomer households have on average experienced a 1.4 per cent drop. Meanwhile, the two youngest cohorts — Generation Z and millennials — enjoyed the biggest increases, at 8.9 per cent and 6.7 per cent respectively. The average income among Generation X households climbed 3.2 per cent over the year to the June quarter, while older Australians had an increase of 2.8 per cent.

Ms Clifton said boomers had not received as much of the emergency government support packages. Nor had they made as much use of the special rules allowing early access to their retirement savings.


And on top of that the RBA is capping the dividend payout ratios of the banks. 😭 Just as well there is little opportunity to travel 🥴
 
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OATEK

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As a largely self-funded retiree, I have definitely seen my $ diminish. No govt handouts, and super taken a hit (well half of it, as the other half is a defined benefit pension). I opted for the half rate pension (eg min 2.5%) so have seen my income slashed by $15k for this year. I work by invitation only these days, and the invites have dried up since my last job that ended late March, and so the average $10k per Q has also gone. But being debt free helps. Also I will save some of what I have lost this year by being prevented from travelling, so may come out close to even in the end.
 

tgh

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I really have no idea ; dividend and interest have all dropped but by how much is moot.
Valuations have recovered much of the recent losses.
The headline fund valuation will not be pretty but it can't go up all the time...
We live a fairly simple but comfortable life with travel our only real indulgence.
Can't see starvation on the horizon anytime soon…..
 
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I will still be down, even without the travel; but it is nice when the cancelled airfare refunds hit the credit card (eventually). Woo-hoo! Credit card in credit! Lets spend!!
Yes I have 2 cards each with over $7000 in credit at the moment. Given how things are, that's going to take me quite a while to whittle down to zero again!
 

cove

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The APRA call on bank dividends will affect many retired folks.If banks pay 50% of their reduced income as dividends that will hurt many.
 

serfty

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Bit of a late Boomer here as i am under 65.

Fortunately I am still in nearly full time paid employment although income is down.

Of course, ebbs and flows affect investments, a bit of an ebb yesterday.:(
 

RooFlyer

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Those taking up the offer to reduce their pension income by 50% may find themselves under the required income level for credit card applications (for sign on bonuses).
…whichforth may be the least of their problems… 🤠
Such as....
Lets see ... a problem for a pensioner, on a 50% reduced income, that is greater than not being able to apply for a credit card (for sign-on bonuses) ... Now, what could they be?

Adequate housing? Being able to pay their bills? Honestly, do you think people on a pension go around making credit card applications, for the sign-on bonuses, willy-nilly? o_O I think you'll find anyone without a salary - and a good one - (such as a pensioner) won't be getting a credit card approved, with or without a sign-on bonus. ;)
 
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Let’s see.... how about the self funded retirees who DO apply for cc with sign on bonuses because they do have the income. Those on here for example. Maybe, they own their own house, maybe they have been keeping cash. I thought we were talking about retirees taking a 50% pension not salaried people. Perhaps, we’re talking about two different groups.

Lets see ... a problem for a pensioner, on a 50% reduced income, that is greater than not being able to apply for a credit card (for sign-on bonuses) ... Now, what could they be?

Adequate housing? Being able to pay their bills? Honestly, do you think people on a pension go around making credit card applications, for the sign-on bonuses, willy-nilly? o_O I think you'll find anyone without a salary - and a good one - (such as a pensioner) won't be getting a credit card approved, with or without a sign-on bonus. ;)
 

cove

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When the Government subsidies run out all those folks who are not bothering to apply for jobs right now will find life quite a lot more difficult. Currently our suburban butcher and restaurants have all commented that they cannot get staff. Now I know that is just 3 businesses but that means the Government handouts do need adjustment.
I am 70 and work 2 or 3 days a week and I make sure our business does not discriminate against older job applicants.but I hear many businesses won’t hire 50 year olds. After 41 years in business we now have quite a few older workers who are getting closer to 60 years of age.
 

OATEK

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Let’s see.... how about the self funded retirees who DO apply for cc with sign on bonuses because they do have the income. Those on here for example. Maybe, they own their own house, maybe they have been keeping cash. I thought we were talking about retirees taking a 50% pension not salaried people. Perhaps, we’re talking about two different groups.
I have re-read the op and can't help but see it as exactly what he said. I am not sure what the Govt rules are about the pension cut, but my fund automatically cut my pension in half, and you had to apply to keep it at current levels if you could not live on the reduced amount.
 
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That’s surprising that they automatically reduced it. I would’ve thought that they would advise you that it’s possible and then leave the decision up to you.

Cc apps on AFF are a fine art. I simply stated earlier that people taking a pension reduction may not qualify for a cc income.

I am not sure what the Govt rules are about the pension cut, but my fund automatically cut my pension in half, and you had to apply to keep it at current levels if you could not live on the reduced amount.
 

Pushka

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That’s surprising that they automatically reduced it. I would’ve thought that they would advise you that it’s possible and then leave the decision up to you.

Cc apps on AFF are a fine art. I simply stated earlier that people taking a pension reduction may not qualify for a cc income.
When the Government halved the required draw down amount, many funds automatically applied the same logic to the rates that current retirees were drawing down, making assumptions on their behalf. I read about it in the media. In mid june. I contacted my brother who is on draw down, he's in one of the industry funds, but they hadnt assumed anything.
 

tgh

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To pad out the thread content a bit.. there has been some interesting feedback on the Governments Largesse ; it has actually expanded the economy and increased the standard of living.
All that drawn down super went into big screen tv's and the like...
 

RooFlyer

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Let’s see.... how about the self funded retirees who DO apply for cc with sign on bonuses because they do have the income. Those on here for example. Maybe, they own their own house, maybe they have been keeping cash. I thought we were talking about retirees taking a 50% pension not salaried people. Perhaps, we’re talking about two different groups.
Same groups, but being a 'self-funded retiree' is NOT the same as being on a Super Fund pension. And we are talking about a 50% pension cut. I am a self funded retiree (with a SMSF), but I don't take a pension, but have looked into it. If you are on a super fund pension, you get a defined amount of income per period from your account and its earnings. Depending on the size of the amount in the account, I doubt that many would have a pension income stream that meets today's requirements to get a credit card. Of course those wealthy people can have schemes that probably would, but the tightened cc rules these days would make it tougher; I'm sure there is a way. And if the pension is halved, then very little chance of a card, for the vast majority.

I have re-read the op and can't help but see it as exactly what he said. I am not sure what the Govt rules are about the pension cut, but my fund automatically cut my pension in half, and you had to apply to keep it at current levels if you could not live on the reduced amount.
Yes. Just as a general explanation for those who aren't across it (and running the great risk of being corrected by one of our Super experts here :) ), after meeting certain conditions, a person can switch from a Super accumulation account to one that is in pension mode. There is a legislated minimum amount that is required to be taken out every year - age dependent, but I think 4% if you are 60-odd and the % gets higher with age. This is to help prevent Super being a tax-shielded wealth preservation method. Some people ask for the minimum amount of pension, others ask for their own required amount.

Under COVID, due to the reduction in value of many share-linked accounts, the government halved the % required to be taken out every year, so as not to dis proportionally take away from the size of the savings. Anyone who ticked the 'minimum withdrawal' box would have seen their pension halved, but the fund should have advised of the reason, and given the option to vary. There is a fund here in Tas whose letter was badly worded and we had people very distressed because that had their Super pension halved, didn't know why and didn't realise they could do something about it. Had trouble meeting rent; no cc applications for them!

The bottom line is that people shouldn't conflate someone with a self-funded Super pension with necessarily being much better off than the government pension. Hopefully, for them yes, but mostly still a far cry from their former salary and the good old days of churning credit cards. No doubt there are exceptions.
 
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