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I'm from Australia and here is my pet hate. Over here we have compulsory Superannuation Funds where 9-10% of your salary is deposited into your superannuation

by hackits 10y ago

I'm from Australia and here is my pet hate. Over here we have compulsory Superannuation Funds where 9-10% of your salary is deposited into your superannuation fund of your choice. Although you cannot access the superannuation fund until you turn 80, and this figure keeps getting pushed back. The business tax rate is 30%, and also employee tax rate for me is 25-27% of my income goes into income tax. We get shoved down our throat's that we shouldn't be a burden on the tax payer, and will have to provide for our own retirement using our own superannuation funds. Well at the same time being faced with the following situation. 27% of the wages go into tax. 9% of the wages go into superannuation fund for retirement. 2% is the medicare levy that you have to pay per year. 5% or $70 per week for Private Health insurance or you get health insurance loading after 30 years old that accumulates 2% per year. Then we're faced with a situation where housing is 8-9 times medium income in this country. So in summary, you're faced with indirect costs to about 43% of your gross income. So take my situation for example 85000+(85000*0.09) gross income the take home at the end of the year is 52,810.5. Considering a house is now 8-9 medium income, this comes to $680,000 for a average 3 bedroom house. Using a full time income to pay that mortgage @ 4.5% PA ($96 going to fees and associated council rates) weekly repayment of $919 this will take ~ 23 years to pay the mortgage off with the total cost of the loan being $1,086,386, and total interest payable. $406,386. So fast forward, forward 23 years I'm 58 with $175,950 in the super fund. Assuming a 3% growth of the value of the house, it would be now worth $1,382,299. The only realistic option for the remainder is to save for the next 20 years until I can access the superannuation (if its around) $344,250 in super payments $1,284,081 in savings, $2,496,588 house value at the time of retirement and medium wage would be ($277,398) So what does this say about the Australian economy? Well everyone is banking their house will pay for their retirement that they would draw down on in later years. If by any chance house prices go through a major correction here the whole system will be thrown into a massive shit storm.

trprog 10y ago
>Although you cannot access the superannuation fund until you turn 80 This is incorrect. You can access your super from 65 no matter what. You can also access it earlier under some specific circumstances. https://www.ato.gov.au/individuals/super/accessing-your-super/ https://www.ato.gov.au/individuals/super/accessing-your-supe...
- hackits 10y ago
  That will probably be pushed back when the baby boomers start retiring and the super funds come under pressure with more people withdrawing than members contributing. This is kind of a pet hate I have. Super funds only make sense when you have more people paying into them than withdrawing. Super funds being a business still need to make a profit to pay investors, wages, brokers, and building associated costs and lawyers. That is kind of the reason why I have my own self managed super fund under my wife and my name that that we purchase government bonds. It's not perfect by any measure, but its a small price to pay to know that we don't need to pulled over the coals when the whole thing falls in on itself.
  - trprog 10y ago
    >Super funds only make sense when you have more people paying into them than withdrawing. It feels a bit like you might be confusing the difference between a pension fund and a super fund. A super fund only pays out to you what you put in (plus hopefully profits from having your money invested). Provided the fees they charge cover the fund's running costs it doesn't matter if there are more people withdrawing than paying in. You only get your own money back, they aren't a ponzi scheme where old investors are paid out with money from new investors. >Super funds being a business still need to make a profit to pay investors, wages, brokers, and building associated costs and lawyers You might want to research some low cost funds. There are lots but as a starting point https://www.ingdirect.com.au/rates-and-fees/superannuation-fees.html https://www.ingdirect.com.au/rates-and-fees/superannuation-f... This sort of thing will likely cost you much less than whatever you accountant is charging you to oversee your self managed fund.
- marak830 10y ago
  You also use to be able to access it all when your renounced your citizenship. But not anymore, which means I have paid all that out over 12 years and can't do anything with it until I'm 65. It won't grow for me, as I don't pay taxes or superannuation in Australia anymore.
  - trprog 10y ago
dmagee 10y ago
This is so on point. The entire economy seems to be driven by housing in Australia. Its a massive ponzi scheme with developers making the big bucks and the tax system geared to assist investors at the expense of first home buyers. If housing crashes there will be a lot of very angry people in this country. Developers and governments need to wake up.
- hackits 10y ago
  Wait until the May 2017 budget. The government may announce co-payment or tax incentive to keep the system going. For my situation I will jump and purchase a new house if I can deduct interest repayment from my taxable income. It would level the playing field where as a investor you can deduct interest repayments from their taxable income but as a owner occupier you cant. I get a bit emotional about this because I went got a CS degree in 2000 and my colleagues quit high school at year 10, and purchase a house in 1998 for $80,000 and in 10 years time that same house was now worth $450,000. In that time they've leverage themselves with 2-3 investment properties. They pay less tax than I do and simply because they got in before the massive housing boom. Yes I'm pissed about the whole situation.
  - hackits 10y ago
    Turns out the May 2017 budget has been announced and the headlines are: `The federal government has given the go-ahead for a scheme in which the private sector would be given access to cheap capital in return for building more community housing.` So no alteration to stamp duty, negative gearing, or capital gains tax discount. Oh well....
- gech 10y ago
  Is there a good list of names being kept?
- astrodust 10y ago
  "If" housing crashes? There is no "if". It is always a matter of "when".
  - 10y ago

by hackits 10y ago

trprog 10y ago

>Although you cannot access the superannuation fund until you turn 80 This is incorrect. You can access your super from 65 no matter what. You can also access it earlier under some specific circumstances. https://www.ato.gov.au/individuals/super/accessing-your-super/ https://www.ato.gov.au/individuals/super/accessing-your-supe...

hackits 10y ago
That will probably be pushed back when the baby boomers start retiring and the super funds come under pressure with more people withdrawing than members contributing. This is kind of a pet hate I have. Super funds only make sense when you have more people paying into them than withdrawing. Super funds being a business still need to make a profit to pay investors, wages, brokers, and building associated costs and lawyers. That is kind of the reason why I have my own self managed super fund under my wife and my name that that we purchase government bonds. It's not perfect by any measure, but its a small price to pay to know that we don't need to pulled over the coals when the whole thing falls in on itself.
- trprog 10y ago
  >Super funds only make sense when you have more people paying into them than withdrawing. It feels a bit like you might be confusing the difference between a pension fund and a super fund. A super fund only pays out to you what you put in (plus hopefully profits from having your money invested). Provided the fees they charge cover the fund's running costs it doesn't matter if there are more people withdrawing than paying in. You only get your own money back, they aren't a ponzi scheme where old investors are paid out with money from new investors. >Super funds being a business still need to make a profit to pay investors, wages, brokers, and building associated costs and lawyers You might want to research some low cost funds. There are lots but as a starting point https://www.ingdirect.com.au/rates-and-fees/superannuation-fees.html https://www.ingdirect.com.au/rates-and-fees/superannuation-f... This sort of thing will likely cost you much less than whatever you accountant is charging you to oversee your self managed fund.
marak830 10y ago
You also use to be able to access it all when your renounced your citizenship. But not anymore, which means I have paid all that out over 12 years and can't do anything with it until I'm 65. It won't grow for me, as I don't pay taxes or superannuation in Australia anymore.
- trprog 10y ago

dmagee 10y ago

This is so on point. The entire economy seems to be driven by housing in Australia. Its a massive ponzi scheme with developers making the big bucks and the tax system geared to assist investors at the expense of first home buyers. If housing crashes there will be a lot of very angry people in this country. Developers and governments need to wake up.

hackits 10y ago
Wait until the May 2017 budget. The government may announce co-payment or tax incentive to keep the system going. For my situation I will jump and purchase a new house if I can deduct interest repayment from my taxable income. It would level the playing field where as a investor you can deduct interest repayments from their taxable income but as a owner occupier you cant. I get a bit emotional about this because I went got a CS degree in 2000 and my colleagues quit high school at year 10, and purchase a house in 1998 for $80,000 and in 10 years time that same house was now worth $450,000. In that time they've leverage themselves with 2-3 investment properties. They pay less tax than I do and simply because they got in before the massive housing boom. Yes I'm pissed about the whole situation.
- hackits 10y ago
  Turns out the May 2017 budget has been announced and the headlines are: `The federal government has given the go-ahead for a scheme in which the private sector would be given access to cheap capital in return for building more community housing.` So no alteration to stamp duty, negative gearing, or capital gains tax discount. Oh well....
gech 10y ago
Is there a good list of names being kept?
astrodust 10y ago
"If" housing crashes? There is no "if". It is always a matter of "when".
- 10y ago