Superannuation Discussion + market volatility

[Quickstatus]

Probably shouldn't have brought housing into it

It is all related

$2M funds a $100k per year pension

With a lot of assumptions going into that calculation

I think its highly unlikely that super with some allocation to equities will underperform inflation over decades

NZ currently in a recession. We are not far behind.
There is no reason why values should keep going up and up. Down is also realistic.

 

[tgh]

However, many of the people with balances >$3M and most of those with balances >$10M are using super not for their retirement needs but as a low-tax environment for wealth creation.

I can understand you thinking this, but opine that is mostly incorrect.
The end result is a function of the journey ; we started with a quite modest super fund balance and no certainty that it would fund our retirement.
We invested it carefully, minimised fees, and drew the absolute minimum pension.
It is now a substantial sum .. but that is also a function of inflation and government policies.. not us being greedy as is sometimes implied.
In hindsight we perhaps should have flown f everywhere , lived a high life, eventually qualified for a part pension and avoided the social odium for our apparently ill gotten gains...

 

[andye]

E

However, many of the people with balances >$3M and most of those with balances >$10M are using super not for their retirement needs but as a low-tax environment for wealth creation.

I can understand you thinking this, but opine that is mostly incorrect.
The end result is a function of the journey ; we started with a quite modest super fund balance and no certainty that it would fund our retirement.
We invested it carefully, minimised fees, and drew the absolute minimum pension.
It is now a substantial sum .. but that is also a function of inflation and government policies.. not us being greedy as is sometimes implied.
In hindsight we perhaps should have flown f everywhere , lived a high life, eventually qualified for a part pension and avoided the social odium for our apparently ill gotten gains...

No social odium, (in fact good on you) just asking to contribute a bit of tax from your good fortune

 

[33kft]

Running up debt now is asking our children and grandchildren to pay for us. That's why I think the affluent over 60s need to be paying more now. You can be 3 decades in retirement and contribute little except GST.

Greater tax revenue will not stop the issue of governments borrowing. It's fanciful. Just like with inflation, governments know that SOME borrowing is a good thing, regardless of how much they tout budget surpluses. Think about it from their perspective - they'll get thinktanks to benchmark their borrowings against pretty much every other country on earth and they'll have lobbyists in their ears saying you're not borrowing enough, you have access to cheap capital, spend some future generations' money on popular policy and assure yourself of re-election.

We have enviable levels of government debt in Australia (don't ask about personal debt though - sheesh). If anyone thinks additional tax rev would go into repaying previous governments' debt obligations without anything to show for it vs buying your next term - I have a toll road to the airport to sell you.

 

[Happy Dude]

However, many of the people with balances >$3M and most of those with balances >$10M are using super not for their retirement needs but as a low-tax environment for wealth creation.

Yes I recall discussion around super being used to hold farms and other property. Taxing unrealised capital gains makes sense in those cases. They could release some of the housing pressure by excluding residential property from super.

 

[andye]

Greater tax revenue will not stop the issue of governments borrowing. It's fanciful. Just like with inflation, governments know that SOME borrowing is a good thing, regardless of how much they tout budget surpluses. Think about it from their perspective - they'll get thinktanks to benchmark their borrowings against pretty much every other country on earth and they'll have lobbyists in their ears saying you're not borrowing enough, you have access to cheap capital, spend some future generations' money on popular policy and assure yourself of re-election.

We have enviable levels of government debt in Australia (don't ask about personal debt though - sheesh). If anyone thinks additional tax rev would go into repaying previous governments' debt obligations without anything to show for it vs buying your next term - I have a toll road to the airport to sell you.

I'm sure you are right but at least some the future generations will benefit from infrastructure spend.

 

[Quickstatus]

I'm sure you are right but at least some the future generations will benefit from infrastructure spend.

Assuming that the govt borrowing goes into infrastructure.

 

[Quickstatus]

Rather than give extra to the govt it would be easy to keep it at $3M by retirement by restricting further contributions so that it reaches $3M at retirement or taking out lump sums at retirement and give it to the kids/grandchildren tax free while I'm still alive, even as non concessional contribution to their own super account

Lots of ways and reminds me of Kerry Packer

 

[andye]

Rather than give extra to the govt it would be easy to keep it at $3M by retirement by restricting further contributions so that it reaches $3M at retirement or taking out lump sums at retirement and give it to the kids/grandchildren tax free while I'm still alive, even as non concessional contribution to their own super account

Lots of ways and reminds me of Kerry Packer

SImilar to my thoughts though I'd probably put it towards their future home loans (and let them make tax-deductible contributions if they can then do so)

Although I've been a bit of a dog with a bone on this, I may well end up affected at some point and hopefully have more years in retirement than working

I'm not planning to give more to the government unless the rules change and say I need to

I do have 4 sons so the intergenerational thing hits home

 

[Brissy1]

Packer's last 5 sec is the best..."because you're not spending it that well that we should be donating extra"

https://www.facebook.com/video.php?v=10153318259351264

Edit, can't insert link to video of his appearance before the senate

 

[tgh]

Alternatives to institutionalisation are expensive , 24 hour live in care at commercial rates is at least 800k pa.
It will be no easy feat to live a quality life without incarceration.
A property with a granny flat may be the go, although employing a suitable carer is likely challenging

 

[33kft]

I'm sure you are right but at least some the future generations will benefit from infrastructure spend.

Not to disagree but in my rather cynical view of things I think this will end up covered by all the public private partnerships that govt love so much for the low outlays, ensuring the user pays for the next century. If our kids are all working from home and we are off towing the caravan around they just need to stick toll gantries every 10km along the national highways and we will have it paid off for them in no time

Or until transurban build the next new tunnel and negotiate another 100 years on the old roads to cover it

 

[Quickstatus]

do have 4 sons so the intergenerational thing hits home

Are you still paying school fees

.....

Im going to sit down again to do super projections to see when my super hits $3M.

 

[NM]

Im going to sit down again to do super projections to see when my super hits $3M.

Around age 82 for me ... if I keep working.

 

[andye]

Are you still paying school fees

.....

Im going to sit down again to do super projections to see when my super hits $3M.

No, lucky with local state options

 

[Quickstatus]

The other tool is to transfer up to 85% of annual super contributions into the spouse account especially if their account has room