Pension Age now to remain at 67 not increase to 70

sandgrooper1 · Senior Member

Pension Age now to remain at 67 not increase to 70

LLD · Guru

Pension age is not retirement age. Retirement is anytime you think your nest egg / super payout can fill the gap between retirement & qualifying for the aged pension.

Remember it was Paul Keating who brought in the super levy so people could effectively fund their own retirement and retire as early as 60 and subsequently not rely on the aged pension. However it has been pointed out that people retire, cash their super in at 60, spend it all, and then front up for the aged pension.

sandgrooper1 · Senior Member

Hi,

LLD, I agree with your comments with this proviso, I didn't mention retirement age and pension age as being one and the same.

My thoughts and opinion expressed below are from someone/couple in their mid fifties contemplating retirement planning issues.

One problem with the current superannuation system is that with the contribution limits, most will not be able to save enough to self fund in retirement.

The other issue as I see it is that if you are able to save enough in super then you are penalised at OAP time.

For example, if you have two married men, Bill and Ben(each has a wife) who have both roughly earned the same amount of money over their working lives, one couple, Bill and wife, have had a great life ,holidays, new cars, out for meals etc and but only have about 400k in super in total.

The other couple, Ben and wife, have saved their money and been somewhat frugal thinking they were doing the right thing and have maybe 850k in super (which would be close to the upper limit for a PAYE worker in my thoughts) .

When 67 rolls around both couples approach Centre link and check their options re OAP payments. Well what happens next??

From my understanding it will go something like this.....Bill and his wife will be eligible for the full pension which added to their superannuation will give them a reasonable income of about 52k per year until 90 or thereabouts.

For all their extra money(450K) saved , Ben and his wife will told to do one by Centre Link because they have to much money and then only gain an extra 10k per year due to nil OAP. Then a small OAP supplement as time goes by and they use their own capital to fund themselves.

So other than buying a Mcmansion so you can hide your money (for now??), the only benefit is about $200 a week extra to spend.....or perhaps giving them the opportunity to retire earlier.

This scenario is not really applicable to those already retired but basically people such as myself and younger are going to be faced with these sort of choices if following the Ben philosophy. As I and my wife basically have done ...

At the end of the day the extra 450k is a lot of self funded years retired .......so what to do?? No guarantee on how many years of life we have is there?
I know this is simplified but even my accountant could not argue against how I see the system as it is currently.

AL

Delta18 · Guru

I seem to recall one John Howard, when he was on the 'back foot' & struggling to get elected saying "there will never, EVER be a GST under a Liberal government"!

Lies, lies, and dammed lies.

They will say anything to protect their own job.

Aus-Kiwi · Guru

Ever think of salary sacrificing ? Adding extra to your supper ? Less tax plus when in pension mode the income is tax free when retired ! Talk to a GOOD accountant , financial adviser .

LLD · Guru

Work backwards. What is the single / couple upper limit of assets where a pension is still attainable.? What pension do you get at the upper limit? Can you cash part or all of you super? Just having a pension card is a benefit in itself. Super has been compulsory since 1992 (Paul Keating). That's 26 years ago. en.wikipedia.org/wiki/Superannuation_in_Australia

I was in the 65 aged pension category. Cashed in my super at 60 as I figured I could live comfortably for 5 years with plenty left over. Was under the old upper limit but I gradually spent it until I had way below the limit to get a reasonable pension. Then whoops, the upper limit was halved. I was a few dollars under the new upper. Pension was slashed somewhat but after adding solar panels and my vehicle assets depreciating somewhat, I have a reasonable aged pension income plus I'm still drawing on my cashed super. Doing "what-ifs" on a computer spread-sheet is brilliant.

Life in retirement also depends how you want to live. We chose to buy a van and travel / holiday around Australia. The van cost several international trips. But as we are over flying, I'm enjoying travelling (particularly north during winter). It's working out well. Wife gets bombarded by Facebook friends about their international travel but as soon as I remind her she has to fly to all those destinations, she loses interest.

Aus-Kiwi · Guru

Yes theres no free camping 30,000ft in a plane ! Lol Long flights .,

Desert Dweller · Guru

It'll go up to 70 eventually you can bet your bottom dollar. blankstare

Izabarack · Guru

LLD wrote:
Pension age is not retirement age. Retirement is anytime you think your nest egg / super payout can fill the gap between retirement & qualifying for the aged pension.

I like the idea of 70 as Age Pension eligibility; the dole bludgers who never contributed have to wait a bit longer to retire on the public purse.

Compulsory super has been in long enough for the majority of workers to choose to retire long before age 70. As a self funded retiree, I will never get a cent back from all those years of paying tax. One way to address the inequality would be to introduce an age pension card to all retirees, whether or not they get any money from an age pension.

Iza

TheHeaths · Guru

Izabarack wrote:
LLD wrote:
Pension age is not retirement age. Retirement is anytime you think your nest egg / super payout can fill the gap between retirement & qualifying for the aged pension.
I like the idea of 70 as Age Pension eligibility; the dole bludgers who never contributed have to wait a bit longer to retire on the public purse.
Compulsory super has been in long enough for the majority of workers to choose to retire long before age 70. As a self funded retiree, I will never get a cent back from all those years of paying tax. One way to address the inequality would be to introduce an age pension card to all retirees, whether or not they get any money from an age pension.
Iza

Leo,
While that is what happens, it was not the intention I suspect of the introduction of Super. I see in one post you seem to be upset by people who cash in Super and then "front up" for the pension, and in another state that is what you have done anyway. Personally I feel that "cashing" out Super should be limited to perhaps 25 or 30% of the balance, and the remainder should be moved into a concessional pension.
Iza,
while "all those years of paying tax" may not get you a pension, you and the rest of us who self fund, have got things back over the years in Health services, Infrastructure, Defence and the like. The pension is a small part of why we pay tax, and we continue to use the other services. It would be nice, however, if there was some universal "retirement" benefit, such as a Health Card or similar for all, that just gave some recognition to those who don't get a pension, as I am certain as we all age, some cheaper medications would be nice and a real benefit.

-- Edited by TheHeaths on Thursday 6th of September 2018 07:19:18 AM

LLD · Guru

Ian.

Not upset about cashing in super, just commenting. I cashed my super in at 60. However there has been suggestions by Govt Financial Advisors that cashing in is limited to a percentage (as you note). Cashing in 100% has been noted as a bit of a hole that I (and many others) have taken advantage of.

Retirees can get a Low Income Health Care Card. That doesn't take into account assets like ones vehicles (cars, boats, vans etc.). Gives a lot of advantages of the Pension Card. I had one from 60-65. Got a shock when suddenly our cars, bikes and van were included in the Aged Pension test. I think some of those people who lost their pension when the maximum assets was halved got a temporary LIHC Card until they applied for one.

To qualify for a LIHC Card a couples income (real and deemed from investments) must be less that $954 / week average over prior 8 weeks. That's nearly $50,000 p.a. which at deeming rates is over $1,000,000 invested. I've never had anywhere that much. The old pension limit was dropped from about $1,600,000 to $800,000.

sandgrooper1 · Senior Member

Aus-Kiwi,

The problem with your suggestion is that there are now limits to what can be contributed to superannuation in place.....by salary sacrifice(as I/we do) or whatever .....if you are already on the limit you cannot add more as there are significant penalties.

Basically through life, as I see it simply put, is this, buy a house and pay it off as far as possible, raise a family and then after all that is nearly done try and save for retirement is the rough guide as to how most working people would approach life......but as it is now contributions are capped and contributions include the 9.5% paid by the employer. There is not enough flexibility in the system to be able to add enough later in life as I see it now.

No doubt the powers that be will meddle further into the future.

I suppose a lot of the younger generation would need to start adding extra to their superannuation over a longer period, but then extra super payments are not really high on the list of priorities when younger and raising a family, paying for a home, cars etc. (Also from what I see on facebook travelling around OZ seems to be a favourite now as well).

To have enough to self fund retirement most will need to invest outside of superannuation(which most probably wont do, thus putting a further future burden on the OAP and taxpayers) which together with the constant changes as per seen implemented by successive governments to my mind defeats the purpose of having a superannuation scheme in the first place and further erodes the purpose/attraction for people to utilize this to save for retirement.

As I said previously if you are already retired then this scenario wont really be your problem.....

Oh well enough soap boxing for now.

AL

Izabarack · Guru

sandgrooper1 wrote:
A......, buy a house and pay it off as far as possible, raise a family and then after all that is nearly done try and save for retirement is the rough guide as to how most working people would approach life.....

Some changing in the thinking among the younger generations. Disciplined couples are renting, saving, and salary sacrificing as much as allowed with a view to retire earlier. Fewer young couples are having fewer children and buying a family home becomes an anchor, hard to downsize and move. Rising divorce rates and non traditional families cause more moving among these younger generations. People change jobs and move much more than used to be the norm. Govt also keen to have older couples without kids to downsize and let younger with families get into the housing market.

Iza

Aus-Kiwi · Guru

There are ways around things ! Im not commenting on open forum . But why cash in or spend just to get old age pension ? Yes I understand getting income lower to qualify for health card etc . Thats the burning point . If your lucky or just bloody clever ? SFR seem to do it harder compared ? Yes there has to be a line in the sand somewhere.

PeterD · Guru

sandgrooper1 wrote:
I have seen the news this morning that the OAP eligibilty age is to remain at 67 and the process of moving it to 70 has been rejected by PM Scott Morrison.

That is of little comfort. They have 5 years to do a John Howard (no GST) and bring their policy back on line.

Stretch60 · Senior Member

Peter D, "they" will most likely not be there for 5 years. Best hide your loot under the mattress if Bill and Co get in next may!

rockylizard · Guru

Stretch60 wrote:
Peter D, "they" will most likely not be there for 5 years. Best hide your loot under the mattress if Bill and Co get in next may!

Gday...

Standard Liberal ploy before an election they are going to lose ... like most things - it woz all sed before

http://australianpolitics.com/1983/02/22/fraser-money-under-the-bed.html

Cheers - John

PeterD · Guru

rockylizard wrote:
Stretch60 wrote:
Peter D, "they" will most likely not be there for 5 years. Best hide your loot under the mattress if Bill and Co get in next may!
Gday...
Standard Liberal ploy before an election they are going to lose ... like most things - it woz all sed before
http://australianpolitics.com/1983/02/22/fraser-money-under-the-bed.html
Cheers - John

Yes John, that is standard LP fare, if you tell a lie often enough people will believe them

35 LIES TOLD BY EX PRIME MINISTER JOHN HOWARD and counting

-- Edited by PeterD on Monday 10th of September 2018 09:30:05 AM