During Covid, we were allowed to dip into our super- $10k, should we be allowed to do the same considering inflation?
Inflation - Should We Be Allowed to Dip into Our Super?
GoldStar on 03/07/2022 - 18:46
Last edited 03/07/2022 - 19:21 by 1 other user
Last edited 03/07/2022 - 19:21 by 1 other user
Poll Options
- 93Yes
- 1150No
Comments
Most will die before 60? 65? Damn
Some will live. Most will die. But its a sacrifice I'm willing to make.
Yes, 60 if you are born after 1 July 1964.
BUT, god knows when they will change it again (note, 'when', not 'if').
If you are 30 today, by the time you are 60, the preservation age may have already been increased to 70..@leiiv: Given what we saw during Covid it’s more likely the preservation age goes down, not up. I’d bet on it. The reality is increasing preservation age just forced a bunch of people onto unemployment for longer, and there was a lost election on the basis of just franking credits. You’re detached from both economic and political reality if you think preservation age will go up in the next 50 years let alone the next 30.
Agree, I did this when covid hit and was made redundant, pulled the max allowed out and put it straight onto the mortgage, then did it again when the new financial year came about.
I did this twice when covid hit as did the Mrs. Now making pre tax contributions to replenish.
Thanks Josh!!
All these CB and SB deals on alcohol not helping 😂
If you keep dipping into your super, then you are living beyond your means. Unfortunately, it's time to adjust the lifestyle down a notch or take the career up a notch.
$10k last year and $10k this year would set you back like 10 years when you retire.
What rate of investment return are you assuming there?
Are you the moron who has all of their super allocated in cash? Assuming a rate of return of 8% after tax 20k will be worth 400k in 40 years. That 400k would continue to compound as you're not going to be withdrawing it all at once. So yes it probably would be worth 10 years for a lot of people.
@Mr Haj: moron here..
1. not ALL of it in cash, 40% just in case it all goes teats up
2. compounding is exactly why I'd rather not loose a lot this early
3. once the majority of the rate rises are coming to a halt and market has hit a low, I'll return it to high growth/aussie shares - now admittedly that's not an exact science, but
a. I think it will be pretty obvious when a recession hits
b. I sleep sounder at night
c. It doesn't affect anyone but myself
@Jaspa7: The flaw/s in your logic are:
- even the very best traders in the world haven't shown the ability to properly 'time' markets, so there's no chance you will/did either.
- most super platforms are so delayed in the buying and selling of investment changes this compounds the above
- you're going to wear addition buy/sell spread costs, even if your platform says theres none there's a definite changeover expense
- super is such a long term investment (30-40yrs for most folks) that such strategies will almost certainly give inferior long term results to just riding the fluctuations out.Even those with under 10yrs SHOULDN'T do timing changes and instead should have altered their asset allocation to lessen such fluctuations e.g be largely defensive instead of growth etc.
But as you said it's your money so have fun but just don't fool yourself that it's a winning system - I can win on black at roulette at the Casino but that one off win doesn't validate my 'system'/methodology.
It does depend on your income/age, we'll use the average full time income of $94k/year. This means it will take 2.2 years to save up $20k into your super. Over the past 29 years, super funds have given an average return of 8.2%/year.
At this rate, assuming that you're 37 and you retire at 67, that's $213k. That's 24 years worth of contributions! Alternatively, that's 33.5 years worth of contributions at the average Australian income of $67k/year. Imagine if you're only 27 earning the average income, we'd be talking about setting you back by 73.5 years to make up the $468k loss!
To quote Einstein on compound interest, "he who understands it, earns it; he who doesn't, pays for it". Think about that before you take money out of your super.
@supersabroso: Have you considered all the relevant factors here?
In 30 years, how valuable will $213k be? I'm guessing not very.
How much did people in 1992 retire with? Do you think that would last you very long nowadays?
If you took that $20k out of your super and used it to pay off your mortgage, how much interest would you save on your mortgage over 30 years?
I'd rather not prop up the biggest financial-demographic ponsi scheme in history.
No, this is one of the multitude of reasons we have inflation in the first place, ontop of grants, bonuses, and what seems like an endless supply of money coming from nowhere, in this case your super.
Just don't eat tomatoes.
What if they are made to pinkie swear that they won't apply for a pension when they are old and broke? ;-)
No
Asking a yes or no question without a poll….. OP must not know how.
Sorted- hear hear
Sorted- hear hear
Yeah, its not.
Okay.
If you experience hardship
You will have to 'define' hardship, as for some, not having the latest iPhone on the day of release would be world ending 'hardship', for others its not having enough money in the bank to get maccas on the way home from dropping $400 on drinks at the club. For others its not being able to put food on the table at home.
Super is also not limitless, so at some point it will run out. If your hardship is coming from spending more than you earn, this isn't the answer.
Now if you can dip into your super but have to repay it back via some HECS type arrangement on your tax etc, then I could be open to talk.
https://www.ato.gov.au/individuals/super/withdrawing-and-usi…
Super is a way to take pressure off social security burden. To rekt it is a ponzi scheme.
So yeah, each to their own.
No it is a step towards replacing the Ponzi scheme that is pensions.
Brah. I couldn't cop the newest pair of Nike TNs brah. That's hardship.
There are hardship rules that allow access before covid and are still in place. No idea what or how they work.
Came for the poll, left disappointed
Edit - Returned for the poll, left semi satisfied
Geez. Came twice and still only half satisfied? Hard to please!
Is there anything in particular you feel it should be spent on? Or more just that you should be able to pull $10k back for various miscellaneous things?
Just wondering as there is a number of ways you can pull it out early if really needed to which may cover the reasons you'd want to pull it out in the first place, like:
- medical treatment and medical transport for you or your dependant
- making a payment on a home loan or council rates so you don't lose your home
- Access due to temporary/permanent incapacity
- etc
https://www.ato.gov.au/individuals/super/withdrawing-and-usi…
Undoubtedly, the best way to save for retirement is by spending your retirement savings whenever the utility bill rises.
If you are on financial hardship, you can apply for access to your super.The third rise in KFC prices is not financial hardship.
The third rise in KFC prices is not financial hardship
Savage
The third rise in KFC prices is not financial hardship
Three times the price for (the unchanged) one third the service!
Haven't bought KFC since the deluxe burger combo went up. Potentially never again.
Super is there for a reason .If it was like a savings account what's the point ?
This incessant call for Super dipping is doing nothing but undermining the very nature of Super.
It's not there to pay for your house, to pay for groceries or anything else. It's meant to lift you above the bare arse nature o the Aged Pension and lessen the burden on the tax system.
So no. No dippy. Deal with inflation like everyone does. Start cutting back.
Given houses aren't counted for aged pension. We really should add homes
Yeah, just sell the house you've lived in for 40 years and buy a cheaper one in some backwater bro, so easy hahaha!
Well I suppose you could continue working to pay the up keep on your massive under-utilised house…
But why bother when you can make some young working families struggling to pay for essentials pay for your mansion while you rot away in 1 room and can't make it up the stairs….
@stirlo: People that have owned houses for 40 years don't own "mansions". They are just worth way more than they originally paid. Old houses is good locations can be worth a heap.
young working families
Lol, "young working families" don't need a mansion either, so not sure how the oldies selling "mansions" is going to help them.
@brendanm: No young working families need lower taxes and not to subsidise part (or full) pensions for millionaires who bought a family sized house, had their families grow up move out and then cry poor when asked to sell it to fund their retirement.
And those large blocks of inner city land are often redeveloped into spaces that multiple families can live in all while the older generation complain about the neighbourhood changing and try to block any redevelopment that could help the young.
No young working families need lower taxes
They are never going to get it, too much free money to throw around.
Millionaires
They aren't millionaires. They have a (likely very modest) house, that has appreciated, through no fault of their own, to be worth more. It is not their responsibilty to sell their family home.
often redeveloped into spaces that multiple families can live in
Hurray, more tiny blocks and shithole apartments, just what we need!
@brendanm: Agree..not everyone wants to live with 50 neighbours 2ft from your door.
You can buy a house and land for same as a sardine can unit/townhouse… know which I want
@pharkurnell: Of course older people would prefer to keep their houses in retirement but is it really fair for them to claim a taxpayer funded pension while being a multimillionaire?
@stirlo: look to the politicians rorting the system first, they pit us against each other to distract us from what they're doing.
@[Deactivated]: Nice straw man.
The reality is younger working class taxpayers should not be funding multimillionaires in retirement regardless of what politician’s are up to.
@brendanm: Happy for you to find a definition that doesn’t match with this one: millionaire but I won’t hold my breath…
@brendanm: Who defines millionaire as only counting liquid assets? The debate on whether the home should be included in pension testing aside, not sure why you are hung up on this. If you have real estate worth over a million dollars with no debt and no other assets, yes you are still a millionaire.
@Prison Mike: A house is a home. The median price of a house in cities in Australia is nearly $900k. Doesn't take much to be a "millionaire". Just own your home, and pay it off before you retire, which most people would do.
Then, when you've worked all your life to pay off your little home, some entitled prick will tell you to sell it, because you are greedy, and someone else should be able to have it for a pittance, while you should move out in into the sticks, away from all your friends and family, or into a shitbox little apartment that you hate. Then, when you die, have the state tax you again on any inheritance you leave your family. Amazing!
@brendanm: My comment was only regarding your claim that nobody with a brain defines millionaire by including the value of their home, I think you'll actually find that you are the one with no brains in this regard.
@brendanm: Would love to see all these homes people have bought in Australia and owned for a life time that are now being sold for a 'pittance'.
@brendanm: With their argument of you shouldn't own a house that you've worked hard to own over 40 odd years, you should sell it and move into a sardine can - why are we bothering? Cause your a millionaire…. and it aint fair blah blah…
Someone sounds jealous to me
@pharkurnell: You can feasibly have a policy where the government funds reverse mortgages or a tax on a deceased persons estate equivalent to the amount of government funding they received in retirement. This way a person can stay in the home they like without taking taxpayers for a ride.
@ginormousgiraffe: Seriously, I hate it when people jump straight from "can we lower the burden on young people by asking pensioners to live off of their own capital first" to "you must want grandma to eat homebrand cat food while living in a cockroach infested slum"
Your kids should not get an inheritance that everyone else has paid for, simple as
@ginormousgiraffe: Did those people not pay taxes for their entire working lives?? You seem to ignore this.
@grr1701: and those people got the healthcare, roads, infrastructure, education and social security for their whole lives.
@stirlo: Yes, included houses as part of the pension asset test. Someone living in a 5 million dollar house in Vaucluse shouldn't get a cent in welfare.
They have a (likely very modest) house, that has appreciated, through no fault of their own, to be worth more. It is not their responsibilty to sell their family home.
If they didn't save enough for retirement - then yes its part of their responsibilty to sell their assets to fund life in retirment, not just live off the pension
I dunno why anyone expects struggling young families to effectively pay higher taxes so retirees in multimillion dollar houses can keep those houses to pass on to their children when they die. You work, you build assets, then you use those assets to fund your retirement. If you run out of assets before death, welfare (aged pension) supports you.
@BigBirdy: It's just the way it is. Me working 7 days a week so I can fund pensioners who own their own homes (ill happily fund those who don't own their own home), but I can't crack into the market because I'm not wealthy enough to buy their houses. Don't worry, I'll have enough in super to not get a pension, but still wont have a house :D.
Working families get shafted. Make a million through working - taxed heavily. Make a million sitting in your property - its all yours!
@dmcneice: Why not buy one of the cheaper properties that you expect the retirees to buy once they sell their house to you?
@brendanm: Are you forgetting these millionaire retirees are receiving tax payer funded pensions? If we didn't give away so much money to rich retirees we'd have a lower tax need across the board enabling the working class to keep more of their wealth.
@stirlo: They aren't necessarily rich though, that's what you seem to be missing. Also, at the time they were working (and paying tax), super didn't exist, and the government at the time told people that they would be looked after with the pension. You can't just randomly cut people off.
As super is now a thing, and has been for a while, the amount paid for pension will go down, the only ones on it in the end, will be the eternal welfare receivers.
They aren't necessarily rich though, that's what you seem to be missing.
They are. They are MILLIONAIRES. A million dollar house is 23 years of income at minimum wage if they did a reverse mortgage. Why should the working class pay for their retirement so they can sit on a mountain of money to give to their children as inheritance?
They should pay their own way not mooch off those who are working and paying tax while trying to support a family and maybe buy a tiny house on the outskirts with a crazy long commute that means they won't get home from work in time to see their kids before bedtime…
Millionaire retirees claiming a part (or full) pension are the most selfish people in Australia and a disgrace to a fair society.
They are MILLIONAIRES
If they were millionaires, they wouldn't be getting a pension.
Why should the working class pay for their retirement
That is what was sold to them when they were working, and when they were paying taxes. They didn't have the opportunity to have super like you do.
paying tax
Your tax rate won't be going down once most people are living off super. The pension is not even 10% of total income tax received.
If they were millionaires, they wouldn't be getting a pension.
Rubbish. The whole problem with the pension assets test is it excludes your home (and for part pension $800k of investment property too). If you have a million dollar house you shouldn't be able to claim government funding for your pension and leach off working families. Get a reverse mortgage and use your assets to fund your retirement rather than ruining young peoples opportunities to have a family.
@stirlo: A million dollar home is only slightly above Australian city median.
ruining young peoples opportunities to have a family.
You really think that the pension, not even 10% of income tax, is "ruining young people opportunities"? What income are you on? At the full time median of $72k or so, you will be paying $13,868 in tax. Let's take 10% off that, assuming that all pensioners had to sell their houses and could not longer get the pension. You would pay $12,481 on tax instead.
You would pay $1387 less tax. Are you only $1387 per annum away from getting a house? I seriously doubt it. This is even assuming that the government wouldn't find some other crap to waste your tax money on, and that you would actually get that big ol 10% all to yourself.
@brendanm: Directly it won't. But if people on pensions whom owned million dollar homes sold their homes and had to use that money to rent/fund their retirement, then I wouldn't need to support them with my taxes, which brings my take home income up - which helps save for a house.
then I wouldn't need to support them with my taxes
I hate to be the one to tell you this, but your taxes are never going down. Even when everyone is using super. Not even 10% of income tax is used toward the pension.
@brendanm: True. They are supposed to be coming down (the stage 3 tax cuts). which for me are more needed then ever given inflation. I bet they get shelved though, double whammy
@dmcneice: If it's true, then your entire argument falls apart. Tax cuts will not be happening under this government, and frankly, at the moment, would be stupid.
@brendanm: My argument was that the tax mix in Australia is unfair, in that Australia takes a disproportionately higher amount of their tax through incomes compared to other countries, and that wealth generation from other means are taxed too leniently in comparison to income through labor.
@dmcneice: Australia has a progressive tax system which is meant to make it more 'fair'. And before we go to the old argument of the rich don't pay tax blah blah, in 2012 the tax bracket of $180k (representing 2% of Australians, hardly rich, but well off) paid over 26% of the total income tax collected.
It's hardly all pensioners that are 'millionaires', lets be conservative (dirty word these days) and say 5%. That's removing 5% of the pensioner pool from the 10% of tax spending, so 0.5% potential reduction? Seems like there is lower hanging fruit than Granny who lives in St Kilda and doesn't want to leave the family home and will likely need to sell in the future to pay for the cost of assisted living to round out her life (most private facilities require $400k+ as a deposit).
Even if the government made the above savings the chance that it would be passed through to the lower tax brackets is unlikely. Realistically they would use it for some overly expensive government capital work that pay people $180k to hold a stop sign, which contributes 26% of the income tax…
Edit. fixed my own spelling
@zephyrfox: It's not the progressive nature that bothers me, its that we tax "income" more heavily than other ways of generating wealth (e.g. CGT discount, negative gearing, trusts, businesses etc).
It increases the burden on the taxpayer though.
Inflation- Should We Be Allowed to Dip into Our Super
hahaha and then you'll have no super left…. Super isn't a savings accounts for everyday life, its a savings account for when you RETIRE. So unless you have retired, the answer will always be NO.
Yes or no. That is the only option. Error perhaps?
Inflation has been caused by people getting too much free money. So what does op suggest we do? Get out more "free" money and spend it willy nilly, what could possibly go wrong.
OP is probably Scomo in disguise. He wants his job back by executing his first home buyer+super policy.
Inflation has been caused by people getting too much free money
Where is this free money of which you speak?
I’ve been trying to get free money for years, but have failed. OzBargain has let me down if I have missed out on free moneyDid you open a bank?
I think you can still get paid to take money in parts of Europe, if you are a bank or sovereign wealth fund or similar. Maybe you should try and pursue your dreams a little harder!Unsure if serious.
- Double jobseeker for some unknown reason
- Billions given to businesses for jobkeeper, even though they made record profits
- Tax offsets
- States giving out various random amounts for "cost of living payments"
- States giving out random vouchers to eat out at restaurants etc.
- $250 federal coat of living vote buying
I'm sure there are plenty more examples, they were just off the top of my head.
States giving out various random amounts for "cost of living payments"
States giving out random vouchers to eat out at restaurants etc.In Victoria we also had:
States giving random rebates for having a holiday in regional victoria
Inflation has been caused by people getting too much free money.
The ones getting the 'free' money are not the ones I assume you are referring to - individuals received a lot less free money than big business.
https://hbswk.hbs.edu/item/why-companies-raise-their-prices-…
https://www.cbsnews.com/news/retail-price-gouging-lowes-amaz…
See my post that is literally right above yours. Here - https://www.ozbargain.com.au/comment/12352884/redir
Inflation is primarily caused by capitalists increasing their markups ("greedflation"). In one year the price of containers on ships increased by 450%. Pure greed.
Capitalism is inherently motivated by greed and acquiring more capital at the expense of the wage slave and slaves in developing countries.
That is a very narrow-minded and politically charged way of looking at economics.
No