toOZ2012 Posted September 2, 2015 Share Posted September 2, 2015 (edited) http://adminpanel.ceda.com.au/FOLDERS/Service/Files/Documents/27922~CEDATheSuperChallengeofRetirementIncomePolicySept2015FINAL.pdf Should super be accessible to first home buyers? Can mortgage repayments be made pre-tax? EDIT: Oops, this thread isn't worthy of the Ring. Can a mod please move it outside. Edited September 2, 2015 by toOZ2012 Quote Link to comment Share on other sites More sharing options...
toOZ2012 Posted September 3, 2015 Author Share Posted September 3, 2015 From page12: Mandate that superannuation contributions be made from after-tax (net) income; I am not so sure about that. I am 30 and apparently, if I my super contributions continue at the same rates, I would have between $350k to $450k(in 2045 dollars) by age 60. That is barely enough to lead a decent life even for people who are currently retiring let alone 30 years from now. Unless they also let people make mortgage payments before tax then this is a big NO-NO. Include the family home in the assets test for the Age Pension as part of the same reform This, I fully agree with. Allow first home buyers to access superannuation funds to purchase owner-occupied housing; Also agree with this but need to set serious limits on how much they can take out so that people don't start buying what they can't afford. Also, a time limit before they can sell. Quote Link to comment Share on other sites More sharing options...
Parley Posted September 3, 2015 Share Posted September 3, 2015 I'm against moves to allow people to access superannuation to buy a first home. The trouble with initiatives like this, including the first home owner's grant, is all it does is push up the price of the houses. The extra amount that someone can spend via grant or dip in to super just ends up as extra money for the vendor. Quote Link to comment Share on other sites More sharing options...
Celt Down Under Posted September 3, 2015 Share Posted September 3, 2015 Bollocks to Point 2 above. Why would you do that? Example. Person A, lives frugally and saves hard to buy himself a decent property which is worth a fair few grand when he retires. Person B, works in the same place as Person A, earning the same amount, and spends all his dosh living it up, not worrying about saving any for retirement or in buying a house. Why should Person A be penalised for doing what he has done? Quote Link to comment Share on other sites More sharing options...
toOZ2012 Posted September 3, 2015 Author Share Posted September 3, 2015 Bollocks to Point 2 above. Why would you do that? Example. Person A, lives frugally and saves hard to buy himself a decent property which is worth a fair few grand when he retires. Person B, works in the same place as Person A, earning the same amount, and spends all his dosh living it up, not worrying about saving any for retirement or in buying a house. Why should Person A be penalised for doing what he has done? I am not talking about the average family home here. A lot of family homes are worth $1Mil+ and they are still eligible for age pension. How is that fair to the current tax payer who can't even afford his/her first home? Quote Link to comment Share on other sites More sharing options...
toOZ2012 Posted September 3, 2015 Author Share Posted September 3, 2015 I'm against moves to allow people to access superannuation to buy a first home. The trouble with initiatives like this, including the first home owner's grant, is all it does is push up the price of the houses. The extra amount that someone can spend via grant or dip in to super just ends up as extra money for the vendor. That maybe but it'll at least help break the rental cycle. I don't believe it's the first home buyers that pushed the prices up. It's all the (foreign) investors and people who are upgrading. Quote Link to comment Share on other sites More sharing options...
Bungo Posted September 3, 2015 Share Posted September 3, 2015 I'm against moves to allow people to access superannuation to buy a first home. The trouble with initiatives like this, including the first home owner's grant, is all it does is push up the price of the houses. The extra amount that someone can spend via grant or dip in to super just ends up as extra money for the vendor. I am against that too. Although my main reasoning is that I think people should take their retirement more seriously., it is like some think it wil never happen! We have an ever aging population and unless people make proper provision, it is putting a real burden on the generationis coming through that have to support all these old people with no or insufficient pension funds. I do agree though, that incentive schemes that create more house sales ultimately just push up house prices. Quote Link to comment Share on other sites More sharing options...
toOZ2012 Posted September 3, 2015 Author Share Posted September 3, 2015 I am against that too. Although my main reasoning is that I think people should take their retirement more seriously., it is like some think it wil never happen! We have an ever aging population and unless people make proper provision, it is putting a real burden on the generationis coming through that have to support all these old people with no or insufficient pension funds. I do agree though, that incentive schemes that create more house sales ultimately just push up house prices. For a family on average single income and kids. Retirement will be the last thing on their mind. They have to worry about next month and the month after and after. Let's work out a few ways that the average person can save for retirement. 1) Put money away - Nope need it for this, that and that (not necessarily luxuries but life needs, kids education, replace a dying car etc) 2) Get a better paying job - maybe but not always possible. Wage growth is so low here and many companies are hiring people as casuals. 3) The average person will probably be out of a job at least once - so savings can be washed out quite quickly. 4) Own property and hope that it grows by retirement time - Bingo. Guess which one works for the average person? Property ownership is indeed forced savings. First home grants and stamp duty concessions have thresholds so will the super-dip thing. It may increase house prices but house prices have to grow for people to retire on them. Though they could use some control on price growth with better housing policies and making it hard for investors (Not that I would be personally happy about it) Quote Link to comment Share on other sites More sharing options...
Bungo Posted September 3, 2015 Share Posted September 3, 2015 For a family on average single income and kids. Retirement will be the last thing on their mind. They have to worry about next month and the month after and after. Let's work out a few ways that the average person can save for retirement. 1) Put money away - Nope need it for this, that and that (not necessarily luxuries but life needs, kids education, replace a dying car etc) 2) Get a better paying job - maybe but not always possible. Wage growth is so low here and many companies are hiring people as casuals. 3) The average person will probably be out of a job at least once - so savings can be washed out quite quickly. 4) Own property and hope that it grows by retirement time - Bingo. Guess which one works for the average person? Property ownership is indeed forced savings. First home grants and stamp duty concessions have thresholds so will the super-dip thing. It may increase house prices but house prices have to grow for people to retire on them. Though they could use some control on price growth with better housing policies and making it hard for investors (Not that I would be personally happy about it) And here is another way. Leave super contributions, those things that are currently deducted at source and made by law in Australia, leave them alone and live within ones means on whatever lands in the bank account every month. Quote Link to comment Share on other sites More sharing options...
toOZ2012 Posted September 3, 2015 Author Share Posted September 3, 2015 And here is another way. Leave super contributions, those things that are currently deducted at source and made by law in Australia, leave them alone and live within ones means on whatever lands in the bank account every month. If only that works. The average family contributing around $6k(before tax) or $5.1k(after 15% tax) to super each year. Multiply that by say 35 years. That's approx $180k in contributions. Now assume that super has performed superbly and there was some wage growth and say they end up with $300k(if lucky) in 2050 dollars. In 2050, they retire and start drawing from their super. Since they don't have a house of their own, $50k/year is needed to just pay rent and survive. So their super will be exhausted in 6 years or maybe 8 and then falling back on age pension for the rest of their long natural lives. If they were allowed to borrow say $40k from their super to hep with their first home? How much better off would they be? I'll leave that as an exercise to the reader. Quote Link to comment Share on other sites More sharing options...
Celt Down Under Posted September 3, 2015 Share Posted September 3, 2015 I am not talking about the average family home here. A lot of family homes are worth $1Mil+ and they are still eligible for age pension. How is that fair to the current tax payer who can't even afford his/her first home? So what if that persons house is worth that much? They paid their taxes, looked after their money, so why would they not be entitled to an age pension? Why should they be penalised just because they have prepared for the future? What you are suggesting smacks of jealousy. Quote Link to comment Share on other sites More sharing options...
toOZ2012 Posted September 3, 2015 Author Share Posted September 3, 2015 So what if that persons house is worth that much? They paid their taxes, looked after their money, so why would they not be entitled to an age pension? Why should they be penalised just because they have prepared for the future? What you are suggesting smacks of jealousy. That's just it. Age pension is not an entitlement. How about I ask for extra money while I have a full paying job? Or holiday pay to take a vacation? Why cause I paid more taxes than a average person? Please don't make it personal, you don't know me or what I do or my assets and liabilities. Quote Link to comment Share on other sites More sharing options...
Paul1Perth Posted September 3, 2015 Share Posted September 3, 2015 I am not talking about the average family home here. A lot of family homes are worth $1Mil+ and they are still eligible for age pension. How is that fair to the current tax payer who can't even afford his/her first home? They weren't worth a mill when they were bought though. It's not their fault that the price of property has soared and they probably had to scrimp and save while they paid off the mortgage, like most people do. I'm against using super to subsidise a first home buy. Like parley I think the homes in the lower price ranges that would be first homes just increase in price. Same as the first homebuyers grant did. If properties sit on the market for long enough with no buyers they will come down in price. Just a matter of waiting it out and not being panicked into taking on a mortgage that you would struggle with. The government brought in compulsory super contributions in 92 and they should be kept in the pre tax bracket. I think history shows that people don't even try and save unless they have something that makes them. Quote Link to comment Share on other sites More sharing options...
Paul1Perth Posted September 3, 2015 Share Posted September 3, 2015 That's just it. Age pension is not an entitlement. How about I ask for extra money while I have a full paying job? Or holiday pay to take a vacation? Why cause I paid more taxes than a average person? Please don't make it personal, you don't know me or what I do or my assets and liabilities. You could ask, but you won't get it. I can't really see too much wrong with the pension arrangements. Me and the wife aren't too far off and I've moved some of my super into a transition to retirement account, which I can draw from and only pay 15% tax whilst salary sacrificing the same amount into super tax free. It's available to anyone over 60 and worth doing for tax purposes. Me and the wife have been to a couple of presentations about retirement and were pretty surprised how generous the allowances are before you don't get any pension at all. Not a bad place to retire Aus. A redundancy anytime now would be a bonus.:cool: Quote Link to comment Share on other sites More sharing options...
toOZ2012 Posted September 3, 2015 Author Share Posted September 3, 2015 They weren't worth a mill when they were bought though. It's not their fault that the price of property has soared and they probably had to scrimp and save while they paid off the mortgage, like most people do. I'm against using super to subsidise a first home buy. Like parley I think the homes in the lower price ranges that would be first homes just increase in price. Same as the first homebuyers grant did. If properties sit on the market for long enough with no buyers they will come down in price. Just a matter of waiting it out and not being panicked into taking on a mortgage that you would struggle with. The government brought in compulsory super contributions in 92 and they should be kept in the pre tax bracket. I think history shows that people don't even try and save unless they have something that makes them. Yes they did work hard for it now it's time to enjoy their wealth rather than putting their hand out, that's all. With post retirement lasting anywhere from 20 to 30 years they may eventually fall back on the aged pension which they are welcome to cause they need it. So you would rather that the average family which can't raise a deposit to buy their first home continue to rent (fillings the pockets of investors) and continue to do so even after they retire on aged pension? The massive prices increases in the last decade is not largely by way of first home buyers. Mining boom, foreign investors, people upgrading cause they can, increased migration buying up the low end stock (probably their first home here but not necessarily everywhere). Quote Link to comment Share on other sites More sharing options...
Parley Posted September 3, 2015 Share Posted September 3, 2015 If someone who is barely scraping by as you suggest then I don't think they should be buying a home. All it would take is for interest rates to rise a bit and they may end up losing their home and their super if your idea is allowed. Quote Link to comment Share on other sites More sharing options...
toOZ2012 Posted September 3, 2015 Author Share Posted September 3, 2015 You could ask, but you won't get it. I can't really see too much wrong with the pension arrangements. Me and the wife aren't too far off and I've moved some of my super into a transition to retirement account, which I can draw from and only pay 15% tax whilst salary sacrificing the same amount into super tax free. It's available to anyone over 60 and worth doing for tax purposes. Me and the wife have been to a couple of presentations about retirement and were pretty surprised how generous the allowances are before you don't get any pension at all. Not a bad place to retire Aus. A redundancy anytime now would be a bonus.:cool: You missed the point with asking extra money thing. Those pension arrangements are fine so that you can give your savings one last boost. Nothing wrong with that. I am guessing you worked hard for it, now enjoy your sunset years. Just a personal question here - feel free to not answer. If the allowances weren't there would you have faced financial hardship or be living in poverty or something along those lines? Do you feel that the younger generation should subsidize your retirement lifestyle? Quote Link to comment Share on other sites More sharing options...
toOZ2012 Posted September 3, 2015 Author Share Posted September 3, 2015 If someone who is barely scraping by as you suggest then I don't think they should be buying a home. All it would take is for interest rates to rise a bit and they may end up losing their home and their super if your idea is allowed. The issue is not having enough savings to raise a deposit. They are currently paying rent and later they'll be paying a mortgage - yes it can increase and so can rents. Now in the grand scheme of things taking out $30k to $40k out of super now isn't gonna make a big difference in the long run - if they still end up on aged pension. The money they take out in today's dollars will probably last them(after super growth etc) a year or two before they are full aged pension at-least they'll have tried for home ownership and it comes down to numbers. Reduce/delay number of people going on aged pension by x% Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted September 3, 2015 Share Posted September 3, 2015 I'm against moves to allow people to access superannuation to buy a first home. The trouble with initiatives like this, including the first home owner's grant, is all it does is push up the price of the houses. The extra amount that someone can spend via grant or dip in to super just ends up as extra money for the vendor. Quite correct. Like in that respect First Home Buyers Grant. May sound reasonable but purely inflates the housing price. The real estate industry is clutching at straws in order to maintain and/or increase the quite ridiculous housing bubble in place. Retirement funds should be for the purpose they were intended. That being to fund a reasonable life in the age. A ALP initiative certain Lib's appear to want to thrash. It should be increased and policed better in regards to costs around the scheme. Quote Link to comment Share on other sites More sharing options...
Parley Posted September 3, 2015 Share Posted September 3, 2015 You may not have heard of the 8th wonder of the world. Compound Interest. That early $40K taken out will make a huge difference in 30 or 40 years time. Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted September 3, 2015 Share Posted September 3, 2015 That maybe but it'll at least help break the rental cycle. I don't believe it's the first home buyers that pushed the prices up. It's all the (foreign) investors and people who are upgrading. It is investors taking advantage of cheap loans and flooding the market. First Home Buyers are becoming an ever rarer quantity in Modern Australia. Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted September 3, 2015 Share Posted September 3, 2015 That maybe but it'll at least help break the rental cycle. I don't believe it's the first home buyers that pushed the prices up. It's all the (foreign) investors and people who are upgrading. Medium term it will do little but boost prices. Nothing wrong with renting. Just need greater protection for those that do. Not a bad idea if we do move away from an essential home owning nation IMO. Allow one that allows greater choice and lifestyle options. One were money can be put to better use than bricks and mortar. It will grow the economy and take the onus of the crazy housing situation that appears to dominate thinking in this country. Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted September 3, 2015 Share Posted September 3, 2015 For a family on average single income and kids. Retirement will be the last thing on their mind. They have to worry about next month and the month after and after. Let's work out a few ways that the average person can save for retirement. 1) Put money away - Nope need it for this, that and that (not necessarily luxuries but life needs, kids education, replace a dying car etc) 2) Get a better paying job - maybe but not always possible. Wage growth is so low here and many companies are hiring people as casuals. 3) The average person will probably be out of a job at least once - so savings can be washed out quite quickly. 4) Own property and hope that it grows by retirement time - Bingo. Guess which one works for the average person? Property ownership is indeed forced savings. First home grants and stamp duty concessions have thresholds so will the super-dip thing. It may increase house prices but house prices have to grow for people to retire on them. Though they could use some control on price growth with better housing policies and making it hard for investors (Not that I would be personally happy about it) Well ever better being affordable housing to chill folk out. While the old manta is housing is forced saving it can also amount to a definite loss of magnitude and financial ruin when over leveraging during a bubble. Quote Link to comment Share on other sites More sharing options...
flag of convenience Posted September 3, 2015 Share Posted September 3, 2015 So what if that persons house is worth that much? They paid their taxes, looked after their money, so why would they not be entitled to an age pension? Why should they be penalised just because they have prepared for the future? What you are suggesting smacks of jealousy. Unearned wealth once again. Often several hundred percent or more. Every body pays taxes. So what? Why should it be a passport to considerable wealth for the next generation while again everybody subsides the entire cost of age care together with a pension? The person would thus benefit from that acquired wealth while alive. Would save a lot of family feuding as well. I would agree housing wealth can be left intact if a policy like Germany prevails. There children are responsible for aged parents up keep according to means. Quote Link to comment Share on other sites More sharing options...
toOZ2012 Posted September 3, 2015 Author Share Posted September 3, 2015 It is investors taking advantage of cheap loans and flooding the market. First Home Buyers are becoming an ever rarer quantity in Modern Australia. First home buyers are in it for the long run. I agree that they may pay a lot more than its intrinsic value but so do a lot of others. First home over 20 to 30 years is relatively safe investment. Medium term it will do little but boost prices. Nothing wrong with renting. Just need greater protection for those that do. Not a bad idea if we do move away from an essential home owning nation IMO. Allow one that allows greater choice and lifestyle options. One were money can be put to better use than bricks and mortar. It will grow the economy and take the onus of the crazy housing situation that appears to dominate thinking in this country. While renting is good, the money is pretty much wasted. However if that was used to pay off the mortgage - they'll have a sizable nest egg when they retire. Well ever better being affordable housing to chill folk out. While the old manta is housing is forced saving it can also amount to a definite loss of magnitude and financial ruin when over leveraging during a bubble. Always the case but the matra "Time in market and not timing the market" truly applies here because of very long term holding. Even the US market with it's horrible housing market crash. Most places have started to regain their value - There are some that are very close to what people paid 10 to 20 years ago but they still own it. As opposed to having nothing by renting. I strongly believe home ownership is a good way to save for retirement. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.