Superannuation Discussion + market volatility

[Seat0B]

They still are.
I think that when people become or are just a little over the $3m will withdraw (if only to avoid compliance/valuation costs)...buy lifestyle assets, home improvements or home upgrade et c. But don't sell those CBA shares you bought for $25

Super is not an investment, it's a structure. People with larger excess will withdraw and invest through another structure which doesn't tax unrealised gains.

Even I (ordinary person and not an accountant/lawyer) can see benefits of, say, transfering excess into private investment Company structure- no unrealised CGT (but realised cgt is higher), 30% tax on net profit but can pay out franked (!) dividend as desired (unlike trust profits), and bonus avoids the super "inheritance" tax. Message to Gov, people aren't stupid.

These are the sorts of things that we will be doing. I’m always surprised at the naivety of both sides of politics that they seem to assume that people affected by various policies will just bend over and take it without making changes to minimise impact. Compliance on an SMSF has been getting tougher and tougher over the past few years. Our super fund auditors are very hard to deal with, and the thought of tougher compliance and the associated costs makes me run screaming away from keeping an excess super balance, even if the net tax payable is roughly the same for the reasons mentioned up thread.

Of course no one wants to pay more tax, but I could live with the extra 15% tax proposed. However, I find the taxing of unrealised gains both unfair and scary. And that is what will drive me to alternatives.

 

[TheRealTMA]

...when there is no recession and price resets

Long term, still enough capital to live off.

 

[Quickstatus]

still enough capital to live off.

Maybe not enough for those who have small balances. The long term assumes enough time to recover

 

[Freq Flier 2013]

I was just thinking and with the tax on unrealized gains, wouldn’t it be more prudent to lock in your gain each year / period, pay your tax and try to reset. Therefor trying to avoid large downturns and “wasted” payment of taxes on unrealized gains?

 

[JohnK]

The problem with that is it assumes regular and stable income from the investments. Unfortunately it is rare for any investments to provide stable returns over the decades it is needed.

My current back of envelope projections is done on 4% yearly return.

Aged care issues aside there is no way we're spending the same at 80 years old as we're expected to spend at 70 years old.

Of course one can forego these discretionary things and rely solely on the public health system and other Government agencies, and live more frugally, albeit at a cost to your health, which as you get older seems be assume more importance in one's mind.

Currently spending ~$300/month on private Health Insurance. Is that spend likely to get higher than $500/month for both of us? I think thats easily covered in my $2500/monthly spend projections. We don't drink, don't eat out, modest car etc.

Also if it gets to that point then I'm prepared to wait to do hip/knee replacements in public hospitals.

No aged care in Australia either.