06 Mar Why You Need To Take Super Seriously
Tony Abbott was recently quoted as saying that an increase of the pension age to 70 “should not be a political suicide mission.”
He has expressed his belief that the current retirement scenario where individuals “…study until [they’re] 25, and then retire when [they’re] 55 or 60 and then live effectively on the taxpayer for another 30 years” is unsustainable.
The entitlement age to the Aged Pension is currently 65, and in an attempt to reduce the expense of the pension system, the Government has already passed legislation to increase the entitlement age to 67.
In an attempt to further reduce the economic burden of the aged pension , the Productivity Commission is putting forth the idea that an increase of five years (from 65 to 70) in the retirement age is needed.
A move such as this might amount to political suicide, however the pension system is not functioning well right now, and with continued advances in medicine, we can expect Australians to live even longer compounding the problem.
Part of the solution is for every Australian to reconsider their retirement strategy, including when and how the government should be expected to help retirees. Helping retirees will not be about hand outs which is what the Aged Pension in the current form is, but rather providing increased tax concessions for individuals to contribute to their super fund. It is for this reason, super will always be a tax paradise.
As our population ages and more individuals retire and draw on the aged pension, the costs to manage the pension on an ever shrinking tax base will continue to be an issue unless individuals take action themselves.
Bottom line, more individuals need to be encouraged to become self sufficient in retirement.
We shouldn’t expect the aged pension in retirement. Clearly Superannuation is designed to replace the need for the Aged Pension for most Australians.
Take charge of your own financial future by simply taking super seriously. The earlier you take super seriously the more income you will have in retirement.
To learn more about SMSFs and what you can do, come along to our next SMSF Education Evening:
References:
Digital Journal: A Global Digital Media Network, http://www.digitaljournal.com/print/article/362656 (accessed March 6, 2014).