Bec. The Grattan Institute’s so called suggestion that Government should make Superannuation annuities mandatory is completely outrageous. This money is the property of the individual and has already had tax paid on it. It’s up to the individual as to how and when they spend it. If they want to live a frugal lifestyle then that’s their choice. This smacks of a state controlled/ communist style system that has no place in our democratic Australia. I may add many Superannuants are self- funded retirees so again saving the taxpayers having to fund their retirement. Furthermore, if the Grattan Institute is so keen to help people spend their money then try starting with some of their own. Butt Out Grattan Institute.
I have two friends who have a defined benefit pension. They both elected to take the income stream option. They both have some savings. Both of them live each day and do not worry about money or sharemarkets etc. I think the issue is that private providers (Challenger for one) offer a minimum of information, and hard to find out what returns will be. If the government was involved, I am sure the take up would much higher. I would certainly consider it
The government defined pension scheme is fantastic if you were lucky enough to be employed and signed up for it before it was discontinued. It was discontinued because the government realised that they couldn’t afford to keep offering it.
Challenger and co. offer less desirable annuities/pensions that are calculated based on actuarial tables and hence are statistically and commercially profitable for their businesses. The government defined pension schemes did not consider age and health when employees signed up and are/were much more financially attractive.
The take up of a new government sponsored annuity may be higher than what Challenger offers, but it should remain optional. The suggested policy was that it should be mandatory.
Fair enough. I felt the article I read was suggesting that part of the super balance could be used, and that it would not be onerous if set up correctly. The Defined Benefit is amazing. I know my frined argues that the govt org contributed 16.5% and that is the difference between us
Hello Bec. What amount of super do you need to live on $72 - $92K a year when you don't factor in the age pension. We have our home and a holiday home, so don't qualify for the age pension. Thanks Randall
I’d be interested to know what the $ amounts are for anyone who gets no age pension - for example, a couple who own a holiday house that would not be eligible for any pension as a result
A spreadsheet would be helpful which lists the comparison between a normal Super income stream and an annuity. Also giving people a choice of annuity ( 20%, 40% ,60% etc ) of their super and corresponding income amounts may lead to greater understanding. People need to hold a certain % of their super aside for emergencies, health issues etc thus 80% that the Gratten institute is talking about is a bridge too far. Also people mainly spend to their income limit so once the limit is set it becomes very difficult to reduce after the fact.
So $1,045000 is the cut of point for all assets where by a part pension is not available if you are a home owner couple.If you look at the asset list on Centrelink you will see it encompasses just about everything including the kitchen sink ! My point is that a homeowner couple combined with even close to a million in super ( and that’s not a lot for two people) would almost certainly exceed the maximum threshold if all other assets as described by Centrelink. Car, boat, furniture, bank accounts real estate ( excluding the family home) and the list goes on. Sure they are fortunate maybe but they have probably made many sacrifices to achieve this, I know I have.
I see a few people making comments about no eligibility for age pension. These figures and many similar retirement calculators are presuming you will be slowly selling down your assets to fund your retirement so you will eventually qualify - just not at age 67 - may not be until age 80. Hence why even someone spending $91,000 per annum with assets of $1,177,000 at age 65 the age pension will fund 32% of your retirement because currently a couple qualify for a part pension even with a $1million in assets. If you have assets of $2 million at age 67 then yes you will wait longer but once you spend your first million you will qualify. The system is pretty generous I feel.
I would only agree to a mandatory government backed annuity for those retirees with Superannuation who partake of any part of the aged pension. It's a fair thing if they are being substituted by the taxpayer that they should be using their Superannuation more expeditiously so their aged pension supplement can be reduced. I however do NOT approve of self-funded retiree's being forced to gobble up their Superannuation because of forced Government legislation.
You won’t qualify for any pension until your super balance has decreased to the level where you begin to qualify for a part pension. At that point, you can start to withdraw less than $90K from your super and use the part pension to make up the gap. As the years go by, the amount of part pension you receive will increase as your super balance decreases. But you will always have $90K per year until you reach an age where there isn’t enough super left to make up the balance of your $90K each year. Whether that eventuates will depend on how long you live, which is the big unknown.
Do a Google search for “how much super can i have and still get the pension” and you find all the details on Asset Tests and the pension. Or sign up for Bec’s course.
Most of these calculations assume people will spend the same every year throughout their retirement. This is unlikely. Most people will spend most in the first few years on travel, etc. Some projections or tools that allow a more realistic drawdown rate would be useful.
Yes Yvonne, good point, someone who has worked for over fifty years and is saving the taxpayer through their own sacrifices over that time should NOT be compelled through legislation to purchase an annuity.
My question is how can I calculate how much super I can safely spend prior to 67 (after 60), so that I can live on say $97,000 a year inclusive of the aged pension aged 67 onwards. I realise that the amount you have in super can affect the amount of aged pension you are entitled to. Is there a calculation for this?
Very interesting data. We are retired and doing OK but the issue always overlooked is retirement accommodation. Cost of getting into a self-care villa in our area exceeds $3 million - about the average cost of a home (which the price follows). A bed in a full-care facility won't leave much change from $1 million. If you are in a villa and your partner requires ca re, you are faced with both.
We are not in a particularly wealthy area in Sydney.
Given these sorts of figures, a million in savings will not go far.
That depends on a number of assumptions (expected return on your funds - growth vs low-risk mix, inflation, capital spend on cars etc ... also any aged care costs above your regular expenses). I built my own model, but you could use one like https://supercalcs.com.au (just an example, there are several). There is really not one answer, but you can explore scenarios to build your understanding.
You finally listened to what I've been telling you! With over 60% of retirees receiving the age pension or part there of, It makes sense to calculate the pension into retirement strategies. The average single with $300k in Super plus the pension will receive the same as a single with $900k in Super! Tell me why you took so long to discover this?
The difference being the single with $900k in super can spend far more on travel etc and the pension then continues to make up the difference as their asset value shrinks (provided they are not purchasing assets or gifting money)
Bec. The Grattan Institute’s so called suggestion that Government should make Superannuation annuities mandatory is completely outrageous. This money is the property of the individual and has already had tax paid on it. It’s up to the individual as to how and when they spend it. If they want to live a frugal lifestyle then that’s their choice. This smacks of a state controlled/ communist style system that has no place in our democratic Australia. I may add many Superannuants are self- funded retirees so again saving the taxpayers having to fund their retirement. Furthermore, if the Grattan Institute is so keen to help people spend their money then try starting with some of their own. Butt Out Grattan Institute.
I have two friends who have a defined benefit pension. They both elected to take the income stream option. They both have some savings. Both of them live each day and do not worry about money or sharemarkets etc. I think the issue is that private providers (Challenger for one) offer a minimum of information, and hard to find out what returns will be. If the government was involved, I am sure the take up would much higher. I would certainly consider it
The government defined pension scheme is fantastic if you were lucky enough to be employed and signed up for it before it was discontinued. It was discontinued because the government realised that they couldn’t afford to keep offering it.
Challenger and co. offer less desirable annuities/pensions that are calculated based on actuarial tables and hence are statistically and commercially profitable for their businesses. The government defined pension schemes did not consider age and health when employees signed up and are/were much more financially attractive.
The take up of a new government sponsored annuity may be higher than what Challenger offers, but it should remain optional. The suggested policy was that it should be mandatory.
Fair enough. I felt the article I read was suggesting that part of the super balance could be used, and that it would not be onerous if set up correctly. The Defined Benefit is amazing. I know my frined argues that the govt org contributed 16.5% and that is the difference between us
Hello Bec. What amount of super do you need to live on $72 - $92K a year when you don't factor in the age pension. We have our home and a holiday home, so don't qualify for the age pension. Thanks Randall
Yes I was wondering this also- without the pension available the numbers will be quite different.
I’d be interested to know what the $ amounts are for anyone who gets no age pension - for example, a couple who own a holiday house that would not be eligible for any pension as a result
Thanks everyone, great discussion. Seem some of us baby Boomers have planned pretty well.
Happy Australia Day everyone, what a magnificent country.
Hi Bec
A spreadsheet would be helpful which lists the comparison between a normal Super income stream and an annuity. Also giving people a choice of annuity ( 20%, 40% ,60% etc ) of their super and corresponding income amounts may lead to greater understanding. People need to hold a certain % of their super aside for emergencies, health issues etc thus 80% that the Gratten institute is talking about is a bridge too far. Also people mainly spend to their income limit so once the limit is set it becomes very difficult to reduce after the fact.
So $1,045000 is the cut of point for all assets where by a part pension is not available if you are a home owner couple.If you look at the asset list on Centrelink you will see it encompasses just about everything including the kitchen sink ! My point is that a homeowner couple combined with even close to a million in super ( and that’s not a lot for two people) would almost certainly exceed the maximum threshold if all other assets as described by Centrelink. Car, boat, furniture, bank accounts real estate ( excluding the family home) and the list goes on. Sure they are fortunate maybe but they have probably made many sacrifices to achieve this, I know I have.
I see a few people making comments about no eligibility for age pension. These figures and many similar retirement calculators are presuming you will be slowly selling down your assets to fund your retirement so you will eventually qualify - just not at age 67 - may not be until age 80. Hence why even someone spending $91,000 per annum with assets of $1,177,000 at age 65 the age pension will fund 32% of your retirement because currently a couple qualify for a part pension even with a $1million in assets. If you have assets of $2 million at age 67 then yes you will wait longer but once you spend your first million you will qualify. The system is pretty generous I feel.
Hello Maree, I'll never qualify for the age pension as long as I keep the holiday home!
I would only agree to a mandatory government backed annuity for those retirees with Superannuation who partake of any part of the aged pension. It's a fair thing if they are being substituted by the taxpayer that they should be using their Superannuation more expeditiously so their aged pension supplement can be reduced. I however do NOT approve of self-funded retiree's being forced to gobble up their Superannuation because of forced Government legislation.
There are deeming rates on super so it doesnt matter how much you draw, the amount assessed for income is the same
This is really interesting. I am surprised that with 1.17 million there is still a pension. How can that be.
What must one have to draw around 90k a year (couple, own home) and get no pension. Hoping to live to 95!
You won’t qualify for any pension until your super balance has decreased to the level where you begin to qualify for a part pension. At that point, you can start to withdraw less than $90K from your super and use the part pension to make up the gap. As the years go by, the amount of part pension you receive will increase as your super balance decreases. But you will always have $90K per year until you reach an age where there isn’t enough super left to make up the balance of your $90K each year. Whether that eventuates will depend on how long you live, which is the big unknown.
Do a Google search for “how much super can i have and still get the pension” and you find all the details on Asset Tests and the pension. Or sign up for Bec’s course.
Most of these calculations assume people will spend the same every year throughout their retirement. This is unlikely. Most people will spend most in the first few years on travel, etc. Some projections or tools that allow a more realistic drawdown rate would be useful.
Yes Yvonne, good point, someone who has worked for over fifty years and is saving the taxpayer through their own sacrifices over that time should NOT be compelled through legislation to purchase an annuity.
Hi Bec
My question is how can I calculate how much super I can safely spend prior to 67 (after 60), so that I can live on say $97,000 a year inclusive of the aged pension aged 67 onwards. I realise that the amount you have in super can affect the amount of aged pension you are entitled to. Is there a calculation for this?
Hi Bec
Very interesting data. We are retired and doing OK but the issue always overlooked is retirement accommodation. Cost of getting into a self-care villa in our area exceeds $3 million - about the average cost of a home (which the price follows). A bed in a full-care facility won't leave much change from $1 million. If you are in a villa and your partner requires ca re, you are faced with both.
We are not in a particularly wealthy area in Sydney.
Given these sorts of figures, a million in savings will not go far.
That depends on a number of assumptions (expected return on your funds - growth vs low-risk mix, inflation, capital spend on cars etc ... also any aged care costs above your regular expenses). I built my own model, but you could use one like https://supercalcs.com.au (just an example, there are several). There is really not one answer, but you can explore scenarios to build your understanding.
Are there any tables or figures available for those that don't own their own home?
You finally listened to what I've been telling you! With over 60% of retirees receiving the age pension or part there of, It makes sense to calculate the pension into retirement strategies. The average single with $300k in Super plus the pension will receive the same as a single with $900k in Super! Tell me why you took so long to discover this?
The difference being the single with $900k in super can spend far more on travel etc and the pension then continues to make up the difference as their asset value shrinks (provided they are not purchasing assets or gifting money)