The impact of forecast inflation on retirement income 55



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We are told people who retire today could live until they are 90.

Today if a person 60 or over becomes unemployed their chances of getting another job are slight.

The current forecast inflation rate is 2.5 per cent, compounded for 30 years that equates to 209 per cent, or in simple terms, to maintain the spending power of your retirement income, a retired person will need to draw twice as much cash from their superannuation fund in 30 years time as they are today. 3 per cent compounded for 30 years is 242 per cent. 3.5 per cent compounded for 30 years is 280 per cent.

What the real inflation rate will be over the next 30 years is more guess work than science. To add to the uncertainty of long range financial forecasts, the people who are producing these forecasts are the same people who failed for forecast the GFC of 2008, and the negative impact, it had on superannuation asset values and forecast income streams.

It is also possible that retired people in their 80s might need some form of assisted living, how much will that cost in 15 to 20 years’ time? I don’t know but my guess is more than it does today.

Bill Shorten gave us his vision of the future, telling all the things he was going to spend money on, but only nominated two sources from which the money would come from. The first was to get multi-national companies to pay the full rate of tax on profits generated in Australia, as Joe Hockey had announced this in the budget the previous night, hardly an original idea.

The obvious question that so far nobody has asked Bill Shorten is, why did the former Rudd/Gillard/Rudd government fail to go after multi-nationals in the same way the current Liberal government is doing? As Joe Hockey has already committee to spend in his budget, the extra money raised from multi-nationals, Bill Shorten cannot spend the same money again to pay for his promises?

The only new tax Bill Shorten announced to pay for all his promises was to raid superannuation savings, in doing so, he was telling all Australians over the age of 50 not to vote for Bill Shorten and the ALP at the next election. Australian voters traditionally have short memories, if you want an income from your superannuation fund in retirement, do not forget Bill Shorten’s budget reply speech of 2015.

Do you agree with Kevin? What did you think of Bill Shorten’s speech?

Kevin Latta

Kevin Latta is a retired Starts at 60 Community member. An accountant by training, he has been a CPA 40 year pin, so I has been involved in finance for some time.

  1. If he hadn’t been involved with union before becoming opposition leader I would think he was genuine. Remember what an A H Bob Hawke was and he was bigger in the unions than Shorten.

  2. I agree with wealthy Superannuation accounts being taxed, some have million of $’s in those account and year a huge cheque every year from the taxpayer. They are getting more per year than the average person earns as a wage

    1 REPLY
    • At present people who are self funded retiree are an asset to our economy because they are not putting their hand out for a pension.
      People who are semi-self funded cost the tax payer less in welfare payments than someone who has no superannuation.
      The point of my posting was to highlight the impact inflation will have on future superannuation incomes, and therefore asks the question how much is enough super to last a persons life time without them in later life needing a top up from taxpayers? the real answer is we don’t know, therefore people like Bill Shorten should look at this these sort of numbers before deciding to raid superannuation saving. Every Australia would love to retire on the Superannuation benefits Bill Shorten, Tanya and the other Labor pollies will receive when they leave parliament, but none of us will.

      1 REPLY
      • But your idea only benefits wealthy individuals. Everyone suffers from inflation. By all means, politicians should be reminded of the benefits they enjoy.

  3. Our retirees are the transitional ones. That is super came later to a lot of retirees or pensioners. The younger work force have had superannuation payments from the start of their working life. So hopefully in 30 or 40 years, they should be better off financially, one would hope! Of course for the serial welfare recipients, who don’t work or contribute in tax. They could be a drain on the Government purse in later years. Long after the baby boomers have gone, so we wouldn’t be blamed for our pensions and drain on the economy! No work no super!

    1 REPLY
  4. From a personal perspective, I would like to say if I had personal super anywhere near the sums that are being touted for the cut off, why would I be wanting to claim money from Centrelink ? However, there are folk who are honest and hardworking who just will not have these kinds of sums in their personal superannuation.
    Society needs to balance out some fairness. If you are fortunate enough to be one of the fortunate top earners, let a fairer system prevail to enhance the lives of those who have not been so fortunate.

    1 REPLY
  5. Wendy Biden. While respecting your views, I am union and proud. I would rather defend unions and unionists than try to defend the multinationals who care little for people. You can always find people who do not do the right thing but the concept of unions you cannot disagree with. We would not want to live in a world without unions.

    6 REPLY
    • 1.7 million people are union members, who pay union fees and who believe that we can work collectively to better the lives of working people. Apart from the benefits that have been won by unions in the past, unions and union members are working every day to protect and enhance conditions through Enterprise Bargaining and negotiating the social wage for workers who do not get pay increases through Enterprise Bargaining. So proud of my Union and respect the achievements that Union members gain for members and non-members.

    • That’s all very well, but i object to them being so heavily involved in the labor party and propping it up and really they tell them what to do. Just who was elected? Also not every one of those union members vote labor, so why does their affiliation fees have to go to labor? The unions should just look after the workers, stay neutral and then there would be more cash to do the job of worker needs and support.

      1 REPLY
      • I agree, if any Australian Citizen wants to join the Labor Party or any other party it is their absolute right to do so. If they want to be active party members attend party meeting, become a delegate etc. again that is their right.
        Political parties are all very vague about how many members they actually have, I believe the ALP Nationally has about 30,000 members, if this is correct then the bulk of union members are not members of the ALP. If any person reading this can come up with more accurate figures please do so.

    • Edna Poynter. You might not know that the Labor Party was born out of the need for workers to be represented in Parliament. Once in government we all understand that whoever wins government must govern for all Australians. We might not agree on every issue but it is democratic. I do not agree with the way conservative governments raise their funds for election purposes. We all know who funds them. They have a lot more funds than the Labor Party. As a unionist I would be happy for my Union fees to go to the ALP but I belong in a union that has voted not to. Democracy again.

    • I have always been a union member.
      When someone agrees to join a union the enrolment forms advise that a small percentage of their membership fees will be donated to Labor. They don’t have to join if they don’t agree to this condition. Pleading ignorance is no excuse.

    • Just to make things crystal clear I totally agree with Joe Hockey going after the multi-nationals, they should pay Australian tax on profits earned in Australia. I am totally confused as to how anyone could concluded from my comments that I was defending multi-national corporations.
      As a comment multi-national corporations engage the best lawyers and best accounting firms, who advise them on how to legally minimise their tax liability, having said that I wish Joe Hockey every success.

  6. I wouldn’t vote for Labor anyway! Hockey has already said the government are going after the multinationals who are avoiding tax, so exactly what is new in Shorten,s agenda? Also, as the writer said they had ample time in the past to do that. Labor have no new ideas it seems.

    7 REPLY
    • Lot of hot air in Shorten’s speech, but poor fellow wont last the distance with 4 knife carriers behind him – Tanya, Bowen, Tony and Albo. They clap and kiss him , ‘they’ve come to bury Libs not to praise him’. Poor chap he’s a Victorian. But Labor are great at borrowing money from China – 113 billion will soon become 200 billions and we will get a pension rise and Australia will become Chinalia. The dragon flags are all over the country. Hail Bill!!

    • Percy you speak the truth Labor have no idea how to manage money to many of them from union background and no actual work or management experience

    • Can you back this up with facts Helen Birt? I actually am not keen on Bill Shorten as Leader, but his budget speech indicates that they are ready to face a future election. Percy…the Libs have also borrowed money this past 18 months of being in power. Every government has to do this.. It is basic economics that governments need to borrow, often over a long period. If we have such a dire situation, why wait years before implementing their policies?

    • Helen Birt
      What actual work or management experience does Abbott or Hockey have??? Hockey doesn’t even manage his own finances yet he claims he can manage the finances of country. As for labor members being mostly from union backgrounds, I would love to see your evidence of that.
      Remember Hockey being a forerunner in the student union during his university days and Abbott was also a paid up student union member.

    • Yair yair yair.They are going after the big end of town .Gawd how many times have we heard this? every Government Libs n Labor same old same old.

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      • The British Conservative Government have actually passed Legislation to force multi-nationals to pay tax the right amount of tax on profits earned in the UK with penalties if they don’t. It would appear that Australian tax officials have been talking to their British counterparts.
        I believe Joe Hockey is serious but it will be a tough job.

  7. Ever notice that politicians even after 1 term can get retirement benefits that no normal ie the ordinary worker gets. The labor government also belong in this catogory. No amount of sprouting about the rich paying extra or not getting pension benefits will ever change. Politicians line their own pockets no matter which side of the fence they sit on. The only difference is in the spelling LIB LAB

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  8. Blinky Bill has no fkn idea really, he’s another union stooge just like the previous 2 from labor, oh that’s right Blinky spend spend spend but where’s the money coming from – flog

  9. Labor have absolutely no idea. If they are so good at fixing the economy then why, after they are in office, do we have such a discusting mess & only more debt? Do people never look at the past & learn a lesson?

    1 REPLY
    • No they don’t Myra. Labor has always left the country in a financial mess , its quite obvious to me Labor voters actually were last in the line when brains were handed out.

  10. Good but I do not want to live to ninety if all my hard earned money lets me live too far my children will inherit nothing and that is not my choice i would like to leave them something

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