Skip to content Skip to main navigation

Lifestyle

Luxury home fragrances, beauty products, gourmet food

Blog Post: Raising the Age of Retirement

By Emily Morris - 15 April 2014 68

I should be up front. I’m one of those people (I imagine and hope we are very few) who spent their twenties and early thirties traveling the world, clocking up a solid log of fabulous experiences; sadly failing to accumulate any superannuation worth bragging about. So for me, I kind of know I’m going to be working, or attempting to work for as long as my bones will hold me up.

My father on the other hand has worked hard for more than 55 years now and at 73 is being forced into retirement, as jobs are hard to come by. All around who love and cherish him tell him he’s earned a break, along with the fairly measly pension that goes with it. But, he wants to keep working because he feels he can, even though he can essentially afford to retire.

With this in mind, I can’t help but wonder how raising the retirement age would actually work. What would it look like? In Singapore, where government supported retirement is nonexistent, there are a plethora of jobs seemingly created for the older generation. Not too physically demanding but enough to keep a small income coming in (in a country where the cost of living is on the increase this hardly covers basic needs, but the idea and infrastructure is there). Yet here we are automating as much as possible. When was the last time anyone saw a tea lady come around the office? Or, a janitor permanently on site to take care of things like spills and basic repair?

I heard something on the radio today about women in their 60s becoming an increasing population within the homeless. Mostly women who have lead their lives traditionally, taking care of a family, raising children, playing by the ‘rules’ – only to be left potentially with a broken marriage, no super and in many cases it would seem, no home. How do we expect these women to work until they’re 70 when they can’t find work in their 60s?

When was the last time your workplace employed someone new to the company who was over 60, or even 55?

To me, this is simply a shift away from paying a pension, toward potentially paying the dole. For people who have worked all their lives, played by the rules and contributed to the economy with taxes and required consumer behaviours, is that really a way for them to end their working lives? Would that merely add a bill for the mental anxiety and depression that would be likely to follow?

This is a cultural change and one that would need incentives for businesses to employ more experienced employees at times when they would traditionally be winding down their working patterns.

It may be a way of the future, but how much would need to change to make it viable? And how do we get onto it? I need to be working for a long time!

What’s Your opinion?


Please login to post your comments, or connect with
68 Responses to
Blog Post: Raising the Age of Retirement
Filter
Showing only Website comments
Order
Newest to Oldest
Oldest to Newst
dungfungus 6:32 pm 24 Apr 14

HiddenDragon said :

From Joe Hockey’s speech to the Spectator magazine gathering yesterday:

“Of Australians over the age of 65, four out of five receive a full or part pension. If we also take into account the concessionary health card then only 14 per cent of older Australians receive no government payments.

At least for the Age Pension, this situation is unlikely to be much different in 2050. Despite spending billions of dollars in taxation benefits for superannuation, by 2050 the ratio of Australians receiving a full or part pension will still be around four out of five.”

From John Hewson, also yesterday (excerpt from AFR article – quoted here – http://www.macrobusiness.com.au/2014/04/john-hewson-end-the-superannuation-rort/):

“It’s worth reconsidering concessions granted for super: they’re as costly as the age pension ($44.8 billion compared to $44.9 billion in age pension), but are growing more rapidly…

Treasury estimates that from the combined support of superannuation tax concessions and the age pension, most people (about 80 per cent) receive around $270,000 support over their lifetime. In contrast, the top 1 per cent of male income earners receives about $520,000 support over their lifetime, because of significant tax concessions to high-income earners.

Surely, we don’t believe that the top 1 per cent require that much incentive to adequately save for their retirement.

These tax concessions not only skew heavily towards high-income earners: low-income earners are actually penalised for saving (you read that right: penalised)…

As a result of this poorly targeted tax concession, 36.1 per cent of the benefits go to the top 10 per cent of income earners, whereas the bottom 10 per cent don’t receive any assistance at all, but are instead penalised.”

Faced with facts like this, it is difficult to escape the conclusion that the superannuation system, as it currently operates, is a very expensive way of taking pressure off the Age Pension.

John Hewson was the opposition leader that lost an election because he couldn’t understand how a GST was going to work so one shouldn’t give his deliberations much credence.
Take a self-funded couple with a SMSF in pension mode with a $1 million balance. If they are both over 65yo they have to draw a mandatory annual pension from the fund of at least 5% of the value of the fund, or $50,000.
This money is tax free taxable income under current legislation but even if it were made taxable and the retirees had no other taxable income they would still not reach the taxable income base for seniors.
The legislation could be changed to make income earned by the fund which is currently tax free taxable but I am sure there would be ways for trustees to minimise this
So, I think Mr. Hockey can forget about fiddling with pensions and funds in retirement mode which leaves only funds in accumulation phase as targets which will simply push the high income earners utilising superannuation contribution concessions back into negative gearing investments.
I still can’t see why negative gearing on property investment (which the exclusive domain of high income earners) is not even being mentioned for review.

Postalgeek 4:33 pm 24 Apr 14

Biggest tip for superannuation: don’t divorce later in life.

Of course, by 2050 I fully expect as an elderly retiree to be have been rendered down as Soylent Green the moment I ceased being productive.

Postalgeek 4:28 pm 24 Apr 14

VYBerlinaV8_is_back said :

dungfungus said :

VYBerlinaV8_is_back said :

All this goes to show is that if you want a comfortable retirement on your own terms, you need to invest substantially during your working life.

You’ve summed it up perfectly. It’s a simple matter of making choices and establishing priorities.

And the part a lot of people forget is that the earlier you start, the less you have to contribute yourself.

Financially, it makes far greater sense to knuckle down in your 20s and work like a dog, then have a decade of stuffing around in your 40s instead.

Or else drink and whore yourself to an early grave. That seems to be an equally valid strategy.

farout 2:55 pm 24 Apr 14

HiddenDragon said :

low-income earners are actually penalised for saving (you read that right: penalised)…

Paying 15% tax in a developed country to support social security for the less well off is too punishing?

HiddenDragon 11:29 am 24 Apr 14

From Joe Hockey’s speech to the Spectator magazine gathering yesterday:

“Of Australians over the age of 65, four out of five receive a full or part pension. If we also take into account the concessionary health card then only 14 per cent of older Australians receive no government payments.

At least for the Age Pension, this situation is unlikely to be much different in 2050. Despite spending billions of dollars in taxation benefits for superannuation, by 2050 the ratio of Australians receiving a full or part pension will still be around four out of five.”

From John Hewson, also yesterday (excerpt from AFR article – quoted here – http://www.macrobusiness.com.au/2014/04/john-hewson-end-the-superannuation-rort/):

“It’s worth reconsidering concessions granted for super: they’re as costly as the age pension ($44.8 billion compared to $44.9 billion in age pension), but are growing more rapidly…

Treasury estimates that from the combined support of superannuation tax concessions and the age pension, most people (about 80 per cent) receive around $270,000 support over their lifetime. In contrast, the top 1 per cent of male income earners receives about $520,000 support over their lifetime, because of significant tax concessions to high-income earners.

Surely, we don’t believe that the top 1 per cent require that much incentive to adequately save for their retirement.

These tax concessions not only skew heavily towards high-income earners: low-income earners are actually penalised for saving (you read that right: penalised)…

As a result of this poorly targeted tax concession, 36.1 per cent of the benefits go to the top 10 per cent of income earners, whereas the bottom 10 per cent don’t receive any assistance at all, but are instead penalised.”

Faced with facts like this, it is difficult to escape the conclusion that the superannuation system, as it currently operates, is a very expensive way of taking pressure off the Age Pension.

VYBerlinaV8_is_back 8:12 pm 23 Apr 14

dungfungus said :

VYBerlinaV8_is_back said :

All this goes to show is that if you want a comfortable retirement on your own terms, you need to invest substantially during your working life.

You’ve summed it up perfectly. It’s a simple matter of making choices and establishing priorities.

And the part a lot of people forget is that the earlier you start, the less you have to contribute yourself.

Financially, it makes far greater sense to knuckle down in your 20s and work like a dog, then have a decade of stuffing around in your 40s instead.

dungfungus 4:02 pm 23 Apr 14

VYBerlinaV8_is_back said :

All this goes to show is that if you want a comfortable retirement on your own terms, you need to invest substantially during your working life.

You’ve summed it up perfectly. It’s a simple matter of making choices and establishing priorities.

Related Articles

CBR Tweets

Sign up to our newsletter

Top
Copyright © 2018 Riot ACT Holdings Pty Ltd. All rights reserved.
www.the-riotact.com | www.b2bmagazine.com.au | www.thisiscanberra.com

Search across the site